Chan Ho Har Wane Daisy and Another v. The Clearwater Bay Golf

HCMP000750/1992

1992, No. MP750

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H E A D N O T E

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The plaintiff individuals and the defendant club having shared and acted upon the common assumption that they had been duly admitted as members of it, and the circumstances being such that it would be unfair and unjust  to the plaintiffs to allow the club to go back on that common assumption, it was estopped from so doing.

Re The Clearwater Bay Golf and Country Club

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Coram: Bokhary, J. in Court

Dates of hearing:  23, 24 and 25 September 1992

Date of delivery of judgment:  29 September 1992

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J U D G M E N T

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1. On October 18, last year, Mr Peter Chan (who is now the 2nd plaintiff in this action which was commenced on March 13, this year) was playing golf at the course in Sai Kung operated by the defendant club, which is a company limited by guarantee. Whatever controversy has since raged around their status, or lack of it, in the club, at that time everybody thought of Mr Chan's wife, Daisy (who is now the 1st plaintiff) as an individual full golfing member of the club. And, correspondingly, everyone thought of Mr Chan as a spouse member.

2. What happened on that day, October 18, 1991, has led one way or the other, to this unhappy litigation. For by a letter dated October 28, 1991, the club wrote to Mr Chan in these terms:

"I am informed that on Friday 18th October, 1991 you were seen to enter the pond on the left of 2nd hole to retrieve a golf ball. This is in strict contravention of Club Bye Law 99 (a) and (b).

PONDS & WATER HAZARDS

99a) It is expressly forbidden to enter or walk upon the edge of any pond or water hazard.

b) Out of play balls in ponds and water hazards may only be retrieved with the use of specifically designed equipment to be used in such manner as to ensure that the player does not enter nor walk upon the edge of the pond or water hazard.

I would welcome your early explanation before I place this matter before the Golf Enquiry Committee."

3. Mr Chan's answer is dated November 4, 1991. It too should be set out in full:

"I would like to clear up a misunderstanding concerning Friday the 18th of October, when I was purported to have entered into the left pond on the 2nd hole to retrieve a golf ball. This accusation is solely based on hearsay by the wife of a committee member, Mrs Edwin Cheng and her friend seemingly exercising their privilege.

This complaint is completely unfounded as I did not even enter the pond on the left. My ball had landed near the edge of the right dry pond and I Proceeded in that direction to retrieve the ball and continue my game back on the fairway. From the complainants' view, there is no possible explanation for her ability to see me at the right pond and to have had me confused as to which pond I was in, one being dry (right) and the other filled with water (left). There was a workman present at the left pond picking up balls, who had in fact retrieved my wife's ball and refused to give it back to her because it was out of bounds. So, she went back to the fairway to continue her game with a new ball. Maybe as a result of the distance between the women and the pond, Mrs Cheng and her friend's sight was not clear enough to enable them to distinguish the difference between workman and myself.

Further to this blatant slander, this woman and her friend proceeded to hassle, interrogate, and threaten to suspend my wife after the game in the women's changing room below the Golf Club. She had asked her whether I had entered the pond on the 2nd hole. My wife unaware of whether I did or not, assumed by the direction I was walking that I was going to the dry pond, therefore my ball must have landed in that pond. So unthinkingly, to keep these women from causing a commotion she replied "yes". Subsequently, they ascended to the coffee shop where my wife and I were eating. There was plenty of time for her to have confronted me personally as there were just the four of us, sitting face to face in the coffee shop for 45 minutes. However, they did not and continued to profess a sense of pretence.

If these women were not so rude and had they not exuded such an air of false superior authority I would be prepared to let this misunderstanding lapse. However, I demand that an apology be made to both my wife and I from Mrs Edwin Cheng and her friend. I reserve the right to claim any expenses incurred as a result of her unjustified and unwarranted complaint should it infringe upon my equal rights as a member as well as causing emotional distress on the part my wife. The two women should have informed a warden or spoken to me directly at the time of the supposed wrong-doing or during the 45 minutes in the coffee shop if indeed we/I had done anything wrong. If she had done so at the time, we could have asked the workman who was present and cleared up the situation on that day. To be fair I suggest that Mr Edwin Cheng should not sit in the committee on this particular issue in order to avoid a conflict of interest. I greatly appreciate your time and patience in attending to this matter. Thank-you."

The club replied by a letter dated November 12, 1991, saying :-

"Thank you for your letter of November, 1991. As there is obviously a difference of opinion over this incident I have referred the matter to the Golf Enquiry Committee. The Golf Enquiry Committee have referred the case to the Golf Committee for their attention at their next meeting on Sunday 17th November, 1991.

You will be informed of their recommendation and any action they consider should be taken."

4. Then came the club's letter of December 15, 1991. It was to Mrs Chan rather than Mr Chan. Taking it up from the second paragraph, it reads :-

"In the meantime a full General Committee considered the case of your spouse member Mr Y.S. Chan whom it was alleged entered the lake between the second and third fairways on the Ocean Nine on 18th October 1991.

On considering the evidence presented the General Committee were of the unanimous opinion that Mr Y.S. Chan did breach Bye-Law G12 (a) and (b)

G12 Ponds & Water Hazards

a) It is expressly forbidden to enter or walk upon the edge of any pond or water hazard.

b) Out of play balls in ponds and water hazards may only be retrieved with the use of specifically designed equipment to be used in such manner as to ensure that the player does not enter nor walk upon the edge of the pond or water hazard.

and inconsequence decided that Mr Y.S. Chan should be suspended from the Club for 3 months with effect from Sunday 15th December 1991 up to and including 15th March 1992 in accordance with Articles of Association 15(a) and 41(a)(ii), (b)(i).

During the period of suspension, the rights and privileges associated with his spouse membership shall cease as from the effective date of his suspension."

5. But that was not all. For in the opening paragraph the club raised a matter which has since grown far larger than the water hazard incident. That paragraph reads:

"In a routine checking of our membership files and records it has been noted that the Debenture No: 2952 to 2961 is not in your name but in the name of Mr Horace Ho Hok Ling (HO18-04-01) whom I understand is your brother. It would be appreciated if you could provide me with any information regarding this matter so that I discuss this further with the Membership Committee."

6. That was in late 1991. Solicitors came upon the scene. Letters were exchanged. The Chars position was and is that they were and are members of the club and that the suspension was void as being imposed in violation of the rules of natural justice. The club's position, on the other hand, was and is that the Chans were not and are not members of it and that the suspension was valid. Neither side could persuade the other to its point of view. And, as I have indicated, these proceedings were commenced in early 1992.

7. The issues now are essentially much as they were when the solicitors were in correspondence. Were the Chans effectively admitted to membership of the club? Was Mr Chan's suspension void or valid? Are the Chars entitled to damages?

8. Having noted that, it becomes necessary now to turn the clock - or I should perhaps say the calender - back to early 1984.

9. The club's fortunes were then at low ebb. So much so that a winding-up order was made against it in April that year. Fortunately, that was followed; in the same year by: the adoption by the club's creditors of a scheme of arrangement; the approval by this Court of the scheme; and the stay by this Court of the liquidation. The scheme seems to have been a success, because the club now appears to be thriving.

10. Having said that, it is necessary to revert once more to 1984. In February that year, Mr Horace Ho, who is Mrs Chan's brother and who had joined the club in 1978, resigned from it.

11. By 1988, the club had sorted itself out to the extent that it considered the time ripe to launch a campaign to, as it were, reactivate dormant memberships For some , reason, it had no record of Mr Horace Ho having resigned. So he was one of those approached in the course of that campaign.

12. As coincidence would have it, the man who contacted him, the club's then Membership and Public Relations Manager, Mr George Elliott, was a friend of his

13. Mr Horace Ho, Mr Elliott and Mrs Chan's recollection of what followed diverge at certain points. Mr Elliott's honesty was not challenged. His memory was. In my assessment, Mrs Chan's recollection is reliable, that of Mr Horace Ho somewhat less so, and that of Mr Elliott seriously flawed.

14. On the whole of the evidence before me, the facts as I find them proved if not admitted are as follows.

15. In everything which he said and did, Mr Elliott had the actual authority of the club or was clothed with its ostensible authority. He invited Mr Horace Ho to have his membership of the club reinstated upon payment of what would be his outstanding dues on the assumption that his membership had never ceased but had merely lain dormant since February 1984. Mr Horace Ho told him that he was not interested, since he was planning to emigrate to Canada, but that his sister and her husband - in other words, the Chans - would be interested in having his membership transferred to them, since they were keen golfers and were planning to return to Hong Kong from Canada.

16. Mr Elliott's reaction was to suggest to Mr Horace Ho that he bring the Chans to the club's premises.

17. In due course, Mr Horace Ho and his wife brought the Chans to the club premises. They had lunch there. Mr Elliott joined them for a cup of tea. He told them that a transfer of Mr Ho race Ho's membership to Mrs Chan was possible if the former was reinstated and the club's General Committee then approved the transfer. Mr Elliott also showed the Chans round the club's premises.

18. Following and as a result of that meeting, Mr Horace Ho wrote Mr Elliott a letter dated January 24, 1989, in which he said this :-

"I joined the Club as a Full Golf Individual Member in 1978 but resigned my membership in February 1984. I understand that I can now be re-instated by paying up the annual subscription due.

In anticipation of my re-instatement being approved. I wonder if it is at all possible to transfer my membership to my sister and her husband, Daisy and Peter Chan, both of whom keen golfers who have recently returned from Vancouver. I myself expect to emigrate shortly to Canada with my family.

Your favourable consideration will be much appreciated".

19. Thereafter Mr Horace Ho's name went forward for balloting for reinstatement. He was unsuccessful at the ballots which took place at the General Committee meetings in April and September 1989. But he was successful at the one in May 1990,

20. So from early 1989 to mid 1990 the Chans had waited. During that time there were conversations between Mrs Chan and Mr Elliott. And in the course of those conversations, he continued to give her the impression that a transfer of her brother's membership to her was possible if he was reinstated and the General Committee approved the transfer. As a result, she waited for transfer, And as she waited the price of joining the club in other ways rose.

21. Mr Horace Ho's eventual success by way of ballot was communicated to him by a letter dated May 12, 1990, from the club signed by its General Manager, Mr J.A. Fortune.

22. Being rather busy perhaps, Mr Horace Ho sat on that letter. And on June 20, 1990, Mr Fortune wrote to him telling him that if he did not pay the outstanding dues within 2 weeks the club would assume that he no longer sought reinstatement.

23. That galvanized Mr Horace Ho into action. He telephoned Mrs Chan in Vancouver, telling her that he had got the reinstatement for her and asking her if she still wanted it. She said that she did. He said that the outstanding dues had to be paid. She told him to pay it, saying that she would reimburse him. The amount was $41,700.00. He paid it. And in due course she reimbursed him.

24. In August 1990, the Chans were back in Hong Kong. And - armed with the letter of January 24, 1989, from her brother, the letter of May 12, 1990, to him and the receipt from the club for the $41,700.00 - Mrs Chan went to the club's premises on the 18th of that month to look for Mr Elliott.

25. She was received instead by Mr Tony Ho, the club's then Marketing and Membership Manager, who had at least ostensible authority to deal with her as he did. Mr Tony Ho, who was called by the club, told me in evidence - and I accept - that Mr Elliott had instructed him to give Mrs Chan a membership application form to complete, and had informed him that once she had done that a subordinate of his i.e. Mr Tony Ho's would issue the Chans with membership cards and a parking label.

26. Mr Tony Ho gave Mrs Chan the form. She completed it. And in due course : she was issued with a membership card as a member; Mr Chan was issued with a membership card as a spouse member; each was issued with a golf bag tag; they were issued with a parking label; she received and paid her club bills; and they both played golf at the club's golf course.

27. That was what they were doing on October 18, 1991, the day when it was said that Mr Chan entered the pond to retrieve a ball.

28. It is now time to pick up the story in regard to that allegation.

29. The matter came before the Golf Committee on November 17, 1991. Neither Mr Chan nor anyone on his behalf was present. In fact, it would appear that even his letter denying the allegation was not before the Golf Committee. For the minutes of that meeting, in so far as they pertain to the allegation, read:

"GM reported the incident that a member, Mr Y.S. Chan stepped into the pond on the Golf Course and statements from two ladies golfers who witnessed the incident were also tabled. The Golf Committee unanimously believed an offender, Mr Y.S. Chan had seriously breach the rules of golf by stepping into the pond on the Golf Course and recommended the case should go to the Membership Sub-Committee for disciplinary action - 3 months suspension of his membership was recommended."

30. The Membership Sub-committee considered the matter at its meeting on November 24, 1991. The relevant part of the minutes of that meeting reads:

"The Golf Committee referred the case of Mrs Daisy (Ho) Chan and Mr Y.S. Chan (spouse) to Membership Committee for their consideration. The Golf Committee were of the unanimous opinion that an offense was committed under Bye law a.12 by Mr Y.S. Chan when he walked into lake between No.2 & 3 holes of the Ocean 9 to retrieve a golf ball. They recommended a 3 month suspension of his membership. Members present considered the evidence and decided to refer the case to the General Committee for General committee Members attention. With a recommendation supporting the Golf Committee."

That does not indicate what was before the Membership Sub-committee. But Mr Fortune's fax of November 25, 1991 to the General Committee states that the Membership Sub-committee studied the following

"1. Original Complaint from Mrs Catalina Cheng

2. G.M.'s Letter to Mr & Mrs Y.S. Chan

3.Reports by Mrs C. Cheng and Mrs Linda Kwan

4. Reply by Mr Y.S. Chan"

31. The General Committee met on the matter on December 14, 1991. The whole of the minutes as disclosed should be looked at with care, and read:

^" The GM brought the case to the attention of the General Committee regarding a spouse member, Mr Y. S Chan who it was alleged entered into pond No.2 at Ocean Nine of the Golf Course which was in breach of Bye-Law G12 (a) and (b). Two lady golfers, Mrs Catalina Cheng and Mrs Linda Kwan both witnessed and reported the incident and their statements were tabled for the Committee's reference. A reply letter from Mr Y.S. Chan dated 4th November 1991 to the GM's letter in which he asked for an explanation was also tabled.

The Committee considered this matter and accepted the statements of the two golfing members. It was noted in one statement that Mrs Chan had advised that Mr Y.S. Chan had entered the pond.

The Committee was of the unanimous opinion that Mr Y.S. Chan breached Bye-Law G12(a) and (b) and was bound by the Articles, of Association Number 15. The Committee was of the unanimous opinion Mr Y.S. Chan should be suspended from the Club for 3 months with effect from Sunday 15th December 1991 up to and including 14th March 1992 in according with Articles of Association 41 (a)(ii), (b)(i). The Committee considered that Mrs Daisy Ho should have stopped her spouse from breaching the Club's rules and as the member is responsible for the behaviour of their spouse member whilst in the Club. It was agreed that a letter should be sent to the member, Mrs Daisy Chan.

GM drew the Committee's attention to appeal procedures as stated, in the Articles of Association 42. The General Committee noted the ' policy for governing a member's appeal. The Committee would not accept legal representation at an appeal. Moreover, General Committee members should sit in the Members' Council to hear the appeal in accordance with the Articles of Association 51(b).

Mrs Daisy Ho' s Membership (HO18-04-01)

The membership status of Mrs Daisy Ho was brought up for discussion at the meeting. GM reported that according to the Members Register at the Club. Mrs Daisy Chan did not appear to have a membership debenture. GM was asked to write to Mrs Daisy Chan asking her to explain her membership status, as for individual membership only the debenture holder would be allowed to be the member. Her membership status would be reviewed on receipt of her reply."

32. Neither Mrs Cheng's statement nor Mrs Kwan's statement had been shown to Mr Chan. The Chans had not been informed that Mrs Kwan had alleged that Mrs Chan had admitted that Mr Chan had gone into the pond. The allegation therefore went unanswered. And the minutes show that the General Committee noted the unanswered allegation.

33. Mr Stone for the club had no instructions to make any admission. But he very sensibly recognized the difficulty he faced in maintaining that Mr Chan had had his due under the rules of natural Justice before the Golf Committee, the Membership Sub-committee or the General Committee. What Mr Stone went on to do was to develop an argument by reference to article 42 of the club's articles, which article reads:-

"(a) When any Member has been reprimanded, suspended, terminated or expelled under Article 41(b), such Member shall be entitled within fourteen days from the receipt of the written notification of the General Committee under Article 41(c) to lodge with the Secretary a notice of appeal in writing to the Members' Council against the decision of the General Committee.

(b) Upon receipt of the notice from such Member, the Secretary shall summon a meeting of the Members' Council with not less than fourteen days' prior written notice.

(c) If such Member wishes to be legally represented at any such meeting he shall apply to the Members' Council for its consent to such representation.

(d) The Members Council may have its legal advisers present at any such meeting.

(e) If such Member does not speak English fluently and desires to have the services of an interpreter then upon four clear days' notice of this being given by such Member arrangements will be made for the attendance of a suitable interpreter who shall not be an employee of the Club. The selection of the interpreter shall be in the absolute discretion of the Secretary and the costs thereof shall be for the account of such, Member who shall deposit such amount as the Secretary may require on account of such costs.

(f) If such Member shall appear at the meeting, the Members' Council shall in his presence hear the evidence against him, if any and shall hear the Member or his legal representative and such evidence as is adduced on his behalf. The Members' Council may from time to time adjourn such meeting, conduct such inquiries into and call for and receive any evidence on the subject matter in any manner as it deems fit, consider any evidence and address as such Member may submit and fix a deadline by which such Member may submit his evidence and address. For the avoidance of doubt, any persons (including the Member in question) giving evidence before the Members' Council may be examined, cross-examined and re-examined by the Council and/or the Member or his legal representative.

(g) If within 15 minutes after the time for which the meeting was called such Member shall not appear at the meeting, the Members' Council may in his absence hear the evidence against him and may decide upon the matter as it deems fit.

(h) Any such meeting of the Members' Council shall be conducted in accordance with Article 51.

(i) Any decision of the Members' Council on any of the aforesaid matters considered at any such meeting shall be final and conclusively binding on such Member. Any decision on the appeal by such Member on his reprimand, suspension, termination or expulsion may be notified to him orally but written notice thereof shall be sent to him by registered post.

(j) The Secretary shall cause a full minute of any such meeting to be made. Upon application in writing by such Member and after payment by him of the costs therefor, a transcript of the said minute shall be furnished to him."

34. It would seem that such appeal involves a complete rehearing. But even then, its capability of curing an earlier defect of natural justice - and I am satisfied that there was such a defect here - is open to serious question. In Leary National Union of Vehicle Builders [1971] 1 Ch. 34, Megarry, J. said this (at p.49 D-F):-

"If one accepts the contention that a defect of natural justice in the trial body can be cured by the presence of natural justice in the appellate body, this has the result of depriving the member of his right of appeal from the expelling body. If the rules and the law combine to give the member the right to a fiar trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him. I cannot think that natural justice is satisfied by a process whereby an unfair trial, though not resulting in a valid expulsion, will nevertheless have the effect of depriving the member of his right of appeal when a valid decision to expel him is subseqeuntly made. Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body.

The strength of such reasoning is obvious. And, in my judgment, it holds good in a social and suspension context as well as in a trade and expulsion context.

35. But, in any event, here there was no appeal. And even if - which I do not accept it was the Chans' own fault that there was no appeal, the fact is that the appeal, if there had been one, would itself have been deficient in natural justice.

36. I say that for these reasons. Article 42(c) provides, as we have seen, that if the appellant wishes to be legally represented before the appellate body he shall apply to it for its consent to such representation. But, as we have seen, the General Committee had already decided beforehand that legal representation would not be allowed at an appeal. And, as we have also seen, it had decided that its members would sit on the appellate body. So any application for legal representation had been effectively headed off, so to speak, unheard. And, of course, the common membership of the body whose decision was being appealed and the body hearing the appeal would at best, have deprived the appeal of the appearance of justice or, at worst, made a mockery of it.

37. Mr Chan had been condemned without being given an adequate opportunity to defend himself. Mr Stone does not go so far as to suggest that a decision against the Chans on the question of membership would automatically debar Mr Chan from a declaration that his suspension was in breach of the rules of natural justice if I were to hold, as I do, that he had not been given an adequate opportunity to defend himself on the allegation which led to such suspension. But Mr Stone suggests that it would, as a matter of discretion, be appropriate to withhold the remedy of a declaration from Mr Chan if I were against him on the issue of membership.

38. So I propose to turn now to that issue. I have already stated the findings of primary fact which I make on such issue. They need not be repeated.

39. The law has long reached a state of development under which the doctrine of estoppel has shed the limitations which had stultified its flexibility and utility in the past. And what has emerged is a general principle which Lord Denning MR stated thus in Amalgamated Property Co. v. Texas Bank [1982] 1 08 84 at p.122 C-D :-

"When the parties to a transaction proceed on the basis of an underlying assumption - either of fact or of law whether due to misrepresentation or mistake takes no difference - on which they have conducted the dealings between them - neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands."

40. Let us apply that principle to the facts of the present case. The "transaction" is the one whereby the club and the Chans dealt with each other as if they were members of it, so that there were - and were exercised rights and obligations on both sides. Thus they played golf and paid dues, while it made golf available and collected dues. They were amenable to discipline, while it enforced discipline. The "underlying assumption" was that the transaction and everything which flowed therefrom was regular: in other words, that they had been effectively admitted to membership.

41. So one would have thought that we could now move on to the question of whether it would be unfair or unjust to allow the club to go back on that assumption.

42. But there are a number of points taken by Mr Stone which have to do with whether we reach that question as well as with how it ought to be answered if we have reached it.

43. One of Mr Stone's points is that the Chans are attempting to found a cause of action on estoppel - in other words that they are seeking to use it as a sword rather than a shield. That, submits Mr Stone, is not permissible. Lord Denning does not seem to agree. The proposition that estoppel cannot give rise to a cause of action is, he said in Amalgamated Property y Co. v. Texas Bank (supra) at p.122B, one of the limitations from which the doctrine of estoppel has freed itself. Here, Mr Stone submits, Lord Denning walks alone. Perhaps so. But I cannot say that I am particularly afraid of following even a single set of footsteps if those footsteps have been left by Lord Denning. Still, it is only right that I should follow at a respectful distance. So let me see if the point really arise in so stark a form in the present case.

44. Mr Lee for the Chans has helpfully drawn my attention to certain illuminating passages in the judgment of Robert Goff, J. at first instance in the same case. They include this one at pp.105D - 106A:

" ... it is in my judgment not of itself a bar to an estoppel that its effect may be to enable a party to enforce a cause of action which, without the estoppel, would not exist. It is sometimes said that an estoppel cannot create a cause of action, or that an estoppel can only act as a shield, not as a sword. In a sense this is true - in the sense that estoppel is not, as a contract is, a source of legal obligation. But, as Lord Denning M.R. pointed out in Crabb v. Arun District Council [1976] Ch.179, 187, an estoppel may have the effect that a party can enforce a cause of action which, without the estoppel, he would not be able to do. This is not, of course, true of all estoppeis. Thus a promissory estoppel derived from Hughes v. Metropolitan Railway Co., 2 App.Cas. 439, is concerned with a representation by a party that he will not enforce his strict legal rights; of its very nature such an estoppel cannot enable a party to enforce a cause of action. But in other cases an estoppel may do so, as, for example, in cases of estoppel by acquiescence. Moreover (subject to one limitation, to which I shall shortly refer) I can see no reason, in logic or in authority, why such a cause of action should not consist of a contractual right. Thus, in Spiro v. Lintern [1973] 1 W.L.R. 1002, a husband who had not authorised his wife to agree to sell his house, was held to be estopped from denying that his wife had such authority, with the effect that a purchaser from his wife was enabled to enforce against him a contract by his wife for the sale of the house. It is true that that case may be treated as a case of estoppel by acquiescence; but the Court of Appeal held that on the facts of the case the husband's failure to disclose to the purchaser that his wife had acted without his authority amounted to a representation by conduct that she had that authority. Furthermore, in two cases the Privy Council has held that a representation by a party as to the legal effect of an agreement can give rise to an estoppel, with the consequence that the representee's rights under the agreement are effectively enlarged: see Sarat Chunder Dey v. Gopal Chunder Laha (1892) 19 L.R. Ind App. 203 and the Calgary Milling Co. Ltd. v, American Surety Co. of New York [1919] 3 W.W.R. 98, the latter of which was applied by Luxmoore J. in De Tchihatchef v, Salerni Coupling Ltd. [1932] 1 Ch. 330. I observe in passing that it is difficult to accommodate these cases within any of Mr Morritt's five categories."

45. The point was picked up by Brandon, L.J. who put it like this (at pp.131H-132A):-

"... while a party cannot in terms found a cause of action on a estoppel, he may, as a result of being able to rely on an estoppel succeed on a cause of action on which, without the estoppel, he would necessarily have failed."

46. In my judgment, that proposition alone would suffice the Chans on the facts of the present case. Their cause of action is founded on the fact that they have been admitted as members in that they were treated by the club as having - and have exercised and accepted - the rights and obligations of members. They rely on estoppel merely to prevent the club from going back on the assumption which they shared with it. And that common assumption is no more than that what had been done was effective.

47. I turn now to the club's memorandum and articles of association. Obviously, there is no question of what has happened being ultra vires the club itself. Admitting golfers to membership so that they may play golf is what golf clubs are there for.

48. So much for the memorandum. I turn to the articles. For the club it is argued that its articles did not permit it to admit the Chans to membership in the way in which they were or were purportedly admitted. I propose to indicate that argument by quoting paragraphs 4 and 5 of the Amended Defence. Paragraph 4 reads:

"The articles of association of the Defendant provided, inter alia,

(1) under article 6 that a Full Member shall mean a person whose candidature for Full Membership has been approved by the General Committee pursuant to the Articles,

(2) under article 9, a Spouse Golfing Member shall mean the wife or husband of a Founder Member or a Full Member or nominee of a Company Member whose candidature for Spouse Golfing Membership has been approved by the General Committee pursuant to these Articles and whose Membership has not ceased for any reason,

(3) under article 13(b), Members shall hold the requisite number of units of Debentures in order to use the Club's facilities,.

(4) under article 18A(a), admission of members shall be entirely in the hands of the General Committee who shall lay down the necessary procedures and decide upon the election; and admission of candidates in its entire discretion,

(5) under article 20, admission to membership shall be by ballot. Candidates for admission must be proposed and seconded by members entitled to received notices of General Meetings and vote thereat. Any application for admission must be made in writing signed by the candidate and by his proposer and seconder and addressed to the General Committee in a specified form.

(6) under article 24(a) that on the approval of candidature the fact shall be notified to the applicant in writing.

(7) under article 26(c) that within one month from the notification of approval of candidature, members shall take up the requisite number of units of Debentures and pay for the same,

(8) under article 30 that the rights and privileges of a Member are, save as provided in the Articles, not transferrable by his own act or by operation of law, and shall cease upon his death or upon his ceasing to be a member."

Paragraph 5 reads:

"The articles of association of the Defendant do not the transfer of membership by a member to his ribling."

There is no article making specific provision for that. Nor, however, is there any specific prohibition against it in the articles.

49. The Chans rely on article 18A(a), which is the first article in the group of articles which come under the heading "Admission of Members", and which provides that:

"The admission of Members of all classes shall be entirely in the hands of the General Committee who shall lay down the necessary procedures and decide upon the election and admission of candidates in its entire discretion."

50. Now, what is to be assumed against the Chans under the rule in Royal British Bank v, Turquand (1856) 6 E & B 327? And what does the rule permit them to assume?

51. The second question is the easier one in the circumstances. The answer to it is simply that they were entitled to assume that the club's internal proceedings had been conducted regularly.

52. The first part of the answer to the first question is also simple enough. They are assumed to have read the club's public documents, which of course includes its articles.

53. In paragraph 10(6) of the Amended Defence it is pleaded that:

"Without prejudice to the Defendant's right to put the Plaintiffs to proof of [their case] the Defendant will contend that the Plaintiffs, in particular, the 1st Plaitnff was or ought to have been aware that the manner in which the Plaintiffs were permitted to use the facilities of the Club was irregular."

In support of that contention the Club pleads the following particulars:

"(a) the 1st Plaintiff has never received any letter or any official notification from the Defendant or its General Committee to the effect that the 1st Plaintiff had been admitted as a member of the Club or that the 2nd Plaintiff had been admitted as a Spouse Member of the Club.

(b) Neither the Plaintiffs or either of them nor Mr Ho had made any application to the Defendant for a transfer of the membership of Mr Ho to the 1st Plaintiff or the Plaintiffs.

(c) Neither the 1st Plaintiff nor Mr Ho made any application to the Defendant for a transfer of the debentures held by Mr Ho.

(d) The 1st Plaintiff had never received any letter or any official notification from the Defendant or its General Committee to the effect that the application for the transfer of the membership from Mr Ho to the Plaintiffs had been approved.

(e) The 1st Plaintiff was aware that her application for membership had not been proposed by a member of the Club and had not been seconded by a member of the Club, and was aware that the Articles of Association required an application for membership to be proposed and seconded.

(f) Despite the inquiry made by Mr Ho by letter dated 24th January 1989, the Defendant never confirmed that transfer of membership was permissible.

(g) The 1st Plaintiff never went through any procedure or formality with regard to the alleged transfer of the debentures held in the name of Mr Ho.

(h) The 1st Plaintiff was not aware of Mr Ho taking any step towards transferring the debentures held in the name of the 1st Plaintiff."

Let us consider those particulars.

54. First of all, I find as a fact that neither of the Chans knew of any irregularity. Was there any irregularity of which they ought to have known?

55. I do not think that there is anything in items (a) and (d) of the particulars. Whether or not letters or any official notification of that kind would be sent out in such circumstances is a matter of internal management for the club. There is no reason why the Chans should have been alerted by the absence of any such letter or official notification in the circumstances. The circumstances, it will be remembered, includes the issue of membership cards, a parking label and golf bag tags. Those spoke as loudly as, if not louder than, any letter or official notification.

56. I turn to item (b). What is pleaded therein simply is not so. The Chans and Mr Horace did apply. The application was handled first by Mr Elliott then by Mr Tony Ho.

57. Next, I turn to item (e). Whether a proposer and seconder could be dispensed with was a matter of the club's internal management, Mr Tony Ho certainly dealt with Mrs Chan on the footing that they could be dispensed with. And there is no reason why she should have thought otherwise in the circumstances.

58. What is pleaded in item (f) is simply not so. Everything which Mr Elliott said and did confirmed that transfer was something which the club could permit.

59. That leaves items (c), (g) and (h), each of which has to do with debentures. I see no insuperable difficulty here. The very first article under the heading "Debentures" is article 26(a), which opens with this statement :-

"The Company shall issue Debentures to Members in accordance with these Articles."

So a debenture is not what makes you a member. It is one of the things you are entitled to if you become a member. So not having a debenture in your name does not necessarily mean that you are not a member. It may only mean that you are entitled to call for, one in your name.

60. On the facts of this case, a state of affairs in which the Chans are members and Mrs Chan is entitled to call for a debenture, such as the one which her brother held but in her own name, is consistent with the underlying purpose of the doctrine of estoppel and the essential function of articles of association.

61. Estoppel is there to promote fairness and avoid uncertainty. It is there to protect blameless people from having the carpet pulled from beneath their feet. And a company's articles are there to regulate and implement its dealings within its objects. They are not there to frustrate such dealings.

62. Leaving the articles, I turn to the Conditions of Exchange under which the club holds its land. My attention has been drawn to these special conditions:

"51. No debentures issued by the grantee shall be assigned or transferred in any way other than by inheritance only to his or her wife or husband or son or daughter or grandson or grand-daughter provided that a debenture holder may surrender his debenture to the grantee for such consideration as the grantee shall decide.

52. The rights and privileges of membership in the grantee shall be personal to the member concerned only, and shall not be transferrable except by Special Condition No.51 above, and shall cease upon the death of such member or upon his ceasing to be a member, provided that where a constituent firm of the grantee has bought a nominated membership, the rights and privileges other than voting may be enjoyed by a nominated employee of the said firm."

Mr Stone does not suggest that those special conditions render a transfer of membership ultra wires the club. He simply relies upon them on the question of whether it would be unfair or unjust to allow the club to go back on the assumption which it shared with the Chans that they were members of it. But he very properly accepts that the club has received no threat of re-entry or anything of the kind. In such circumstances, those special conditions do not defeat the Chans. And I so conclude even without having to decide whether Mr Lee is right in his submission that, in any event, those special conditions do not prohibit a transfer following surrender.

63. I am approaching the end of this judgment. And I should now turn to the defence raised in paragraph 21(3) of the Amended Defence, which reads as follows:

"Further or alternatively, if, which is denied, the facts and matters relied upon by the Plaintiffs would constitute an estoppel, the Defendant will rely on the following matters

(a) By a letter dated 27th August 1992 from the Defendant's solicitors to the Plaintiffs' solicitors, the Defendant offered to the Plaintiffs an option to become members of the Defendant in one of the 3 ways mentioned in the letter, namely (a) acquiring full membership by subcribing to 10 units of debentures at the cost of HK$1,000,000 (being the cost applicable in May 1990),

(b) by processing an application by Mr Ho to upgrade his existing individual membership to corporate membership at a cost of HK$500,000 (being the cost applicable in May 1990), or (c) by processing the surrender of Mr Ho's debenture and thereafter issue a fresh debenture to the 1st Plaintiff, which involves a net cost of HK$475,000.

(b) The three options put forward by the Defendant were the only proper procedures under which the Plaintiffs could have become members of the Defendant in May 1990 under' its articles of association.

(c) The Plaintiffs have rejected the Defendant's offer.

(d) If the Plaintiffs were to accept the offer by the Defendant, the Plaintiffs would not suffer the alleged prejudice (which is denied). By declining or failing to accept the offer, the Plaintiffs are seeking to rely on an estoppel to be in a better position than they would have been if they and Mr Ho had proceeded properly under the articles of the Defendant.

(e) In the premises, it would in any event not be inequitable to allow the Defendant to assert as against the Plaintiffs that the Plaintiffs have not been admitted or properly admitted as members of the Defendant."

That defence breaks down for at least two reasons. The first is that it was not raised until after the Chans had incurred a lot of costs, and the offer on which it is based does not cover costs. The second is that - as Mr Lee established in the course of his cross-examination of the club's Deputy Chairman for Finance, Mr W.K. Timso - the prices put forward under the offer were not the May 1990 prices as asserted, but were in fact in excess of the May 1990 prices. The Chans' rejection of the club's offer does not defeat their claim.

64. The conclusion to which I come is that it would, in all the circumstances, be unfair and unjust to allow the club to go back on the assumption which it shared with the Chans that they were members of it. The Chans took the rough of their membership along with the smooth of it. Mr Chan is not in good health. He suffers from heart trouble. The exercise - and I daresay the relaxation - which he gets out of golf is very important to him. He and his wife waited a long time to get into the club. Shortly after that, they got nothing but aggravation and anxiety. They were put to trouble and expense. The club's offer is inadequate to defeat them.

65. In the result, I make a declaration that the Chans are members of the club. That puts an end to Mr Stone's invitation to withhold, as a matter of discretion, declaratory relief in regard to natural justice. So I also make a declaration that Mr Chan's suspension was in violation of the rules of natural justice and therefore void of legal effect.  The parties agree that in the event of their succeeding on the question of membership, the Chans should each have an award of ore dollar by way of nominal damages. I therefore award them each one dollar damages.

66. Before inviting counsel to address me on consequential directions and costs, I wish to say how very grateful I am to counsel on both sides for their assistance throughout this case.

[Consequential directions and costs]

67. The parties are agreed that it would be convenient that they should have liberty to restore on the question of directions; and I gladly give them such liberty. As far as costs are concerned, Mr Store does not oppose costs. But in answer to the suggestion that wthere should be a certificate for two counsel, he suggests : first, that no certificate is necessary; and, secondly, that if one were necessary, I ought to withhold it. As to that, I say this. I award the plaintiffs the costs of the action of course. And on the question of a certificate, I share Mr Stone's view that no certificate is necessary; but I am prepared to say - and do say - that if one had been necessary I would have given it. Finally, I renew my expression of gratitude to counsel on both sides.

Representation:

Mr Martin Lee, O.C. and Mr Warren Chan (instructed by Hastings & Co.) for the plaintiffs, the Chans

Mr William Stone (instructed by Wilkinson & Grist) for the defendant club