Ng Pak Man and Others v. Fung Ming Kai and Others
Read the full judgment text of HCA 4995/1983 on BabelCite. This High Court CFI judgment was delivered on 13 April 1984.
1. On October 16th, 1981, in the Gazette, the Transport Department invited applications from existing registered owners of public light 'buses for the grant of exclusive rights to operate certain routes, in accordance with the provisions of regulation 4 of the Road Traffic (Public Omnibus, Public Light Bus and Public Car) Regulations, which reads as follows:
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HCA004995/1983
IN THE SUPREME COURT OF HONG KONG HIGH COURT _____ BETWEEN
________ Coram: His Honour Judge Leathlean, sitting as a Deputy Judge of the High Court in Court. Dates of Hearing: 21 - 23, 26 - 29 March 1984, 6, 9 - 13 April 1984 Date of Delivery: 13 April 1984 __________ JUDGMENT __________ 1. On October 16th, 1981, in the Gazette, the Transport Department invited applications from existing registered owners of public light 'buses for the grant of exclusive rights to operate certain routes, in accordance with the provisions of regulation 4 of the Road Traffic (Public Omnibus, Public Light Bus and Public Car) Regulations, which reads as follows:
"Person" is not defined by the regulations or the Road Traffic Ordinance. It is defined by section 3 of the Interpretation and General Clauses Ordinance thus:
Sub-section (2) of section 7, as is well mown, provides:
Yet, I am told, the Transport Department stipulated - by what right I know not - that only applications by individuals would be entertained, and that applications by more than one individual or any other entity would not. I am also told that it further stipulated that applicants had to prove to its satisfaction that they were able to withstand the "greatest imaginable loss" during the first three months of operation. 2. The thirteen plaintiffs, the three defendants and one Tse and one Fung were all desirous of securing the franchise, but none of them was in a position to prove to the satisfaction of the Transport Department that he was able to withstand the greatest imaginable loss during the first three months of operation. 3. The closing date for applications was November 5th. On a date which must have been between October 16th and November 5th, although the evidence is "in or about September", the 6th plaintiff convened a meeting of all the plaintiffs save the 2nd, who the 1st plaintiff says he represented, all the defendants and Tse and Fung at which it was agreed by all that the 1st defendant should be their representative to apply for the franchise. The lst defendant duly applied in his own name for, and secured, the franchise. Differences eventually arose, hence this action. 4. It transpires that this association of the plaintiffs, the defendants, Tse and Fung is unregistered. Although illegality is not pleaded I have raised - as I was under a duty to do - the question whether the association is not therefore unlawful. Suspiciously late in the day it was suggested that it was the 1st defendant's fault that it had not been registered. Not to mince matters I do not believe that. 5. This aspect of the matter is governed by the Societies Ordinance, sub-section (1) of section 18 of which provides:
Any company, association or partnership, consisting of not more than twenty persons, formed for the sole purpose of carrying on any lawful business and registered under any other Ordinance is exempted - cf. item 6 in the schedule. The instant association is therefore an unlawful society. The consequences flowing from that for present purposes were considered by the former Full Court in Yim Wai-tsang v. Lee Yuk-har.(1) That case concerned a Chinese money loan association which was neither registered nor exempt from registration under the Societies Ordinance. The Court held that the claim was founded on the enforcement of the rules of an unregistered and therefore an unlawful society which the court could not uphold. The instant association has no rules. Indeed, its nature is such that it is difficult to see how it can function at all in the event of any dispute. The basis of unincorporated associations is agreement (cf. Lloyd: The Law relating to Unincorporated Associations (1938), page 18.) The plaintiffs are asking me to grant relief of various kinds in respect of alleged breaches of what they say was agreed between them and the defendants. I do not think that I should. In Waller et al. v. Gipps(2) it was held on appeal in Australia that a company that is by law illegal has no locus standi in court, and cannot sue in respect of any cause of action. Martin, C.J., observed (at page 125) that such a company does not exist in the eye of the law, and so cannot be aided by the courts in any way. 6. I am asked, inter alia, for a declaration that the 1st defendant holds the franchise on trust for the plaintiffs and the defendants. Sykes v. Beadon(3) is, I apprehend, further authority for the proposition that such a declaration cannot be granted. Next I am asked to order that an account be taken. In Greenberg v. Cooperstein(4) it was held that where those who have subscribed money for an illegal purpose come requiring the agents in whose hands it is and who were to apply it for that purpose and have not done so to return it to them an account could be ordered, but the Court did not apparently consider, as did the Court in Waller v. Gipps,(2) the question whether an illegal association can have any existence in the eye of the law. I do not think that I can properly make the order sought. Then I am asked to grant an injunction restraining the 1st defendant from doing various things. The instant association being illegal, I do not think that I properly can, again on the authority of Waller v. Gipps.(2) 7. That, in my judgment, however much I may regret it, suffices to dispose of the matter. I will say, however, that in my judgment the merits are with the plaintiffs. While I do not believe that the 1st and 6th plaintiffs have told the truth, the whole truth and nothing but the truth, I believe that where they have told less than the truth they have done so because they consider that the 1st defendant has taken an unfair advantage of them and because they do not intend to let him get away with that at any price if they can help it. The 1st and 6th plaintiffs have contradicted themselves and each other in numerous respects, but I believe them when they say that it was agreed by all at their first meeting that each should keep his own profit and bear his own loss. They have not, however, persuaded me that it was agreed upon that occasion or at all that the profits made and the losses incurred by any additional 'buses should be divided equally between them. The old view was that such an agreement as the former could not constitute a partnership in law - cf. Pollock on the Law of Partnership, 15th (1952) edition, page 9 et seq.). The modern view is that it can - cf. Lindley on the Law of Partnership, 14th (1979) edition, page 13. Quite apart from that, though, according to the 1st plaintiff (but not the 6th plaintiff) there was nothing to stop Fung and Tse from withdrawing, and that, of course, would not be true in the case of a partnership properly so called. As to this I believe the 1st plaintiff, not the 6th plaintiff, whose evidence to the contrary came suspiciously late in the day. Having seen and heard the 1st and 6th plaintiffs, and despite the evidence of both to the contrary, I believe that the last thing they wanted was a formal, legal partnership. Even now, by their writ, they do not seek an order for the execution of a formal agreement or registration. They have said that they did not wish to be "controlled" by the 1st defendant. They have made it quite clear that they did not wish to enter into any kind of arrangement which would have resulted in the risk to them of having to share others' loses, although they were quite prepared to, and did, contribute towards the general expenses of operating the routes. The 6th plaintiff says that he realized that the arrangement between them was such that if they fell out with the 1st defendant it was fraught with peril, but I believe that he and all the other plaintiffs preferred to run that risk rather than the risk of having to share others' losses. In my judgment, the plaintiffs have failed to prove a partnership, but have merely proved an unincorporated association. I would, therefore, have refused to declare that a partnership exists between them and the defendants. I would, however, have declared that the lst defendant holds the franchise on trust for the plaintiffs, the 2nd and 3rd defendants and himself. I would also have ordered an account. 8. The 1st defendant also has, I believe, told less than the truth, the whole truth and nothing but the truth. But he has admitted that because he found the plaintiffs unruly and unbusinesslike he determined to run the routes in his own way without any further reference to the plaintiffs. Normally, of course, he would not be allowed to do any such thing - cf. Sheppard v. Oxenford.(5) He says that one Ho and one Lee of the Transport Department in effect (verbally) ordered him to do that, and that Ho also ordered him to replace the 6th plaintiff's 'bus with another. Messrs Ho and Lee have not, however, been called, and I am not persuaded of the truth of those assertions, not that I think that the 1st defendant can hide behind the skirts of the Transport Department in these matters anyway. The 1st defendant further admits that no accounts have been rendered since September, 1982. I do not accept his explanation for that either. 9. The lst defendant's powers, duties and responsibilities are so vaguely defined (cf. exhibit F.227) that I do not think that I could properly have granted any of the injunctions sought in terms as prayed save maybe an injunction requiring the 1st defendant to renew the licenses of the 'buses, which the 1st defendant himself admits was one of his duties and responsibilities. But apart from that, I doubt whether, as things stand at the moment upon the evidence, I could properly have granted even an injunction restraining the 1st defendant from doing anything against the interest of the association. 10. I am, of course, conscious that my decision is perforce an unsatisfactory one. But for that the plaintiffs themselves are at least partly to blame. Had they taken competent legal advice at the outset they would not have found themselves in the position in which they now are. It may very well be that the day is long overdue for a review of the Societies Ordinance in the context of present day Hong Kong, but that is a matter for the legislature. The decision in Yim Wai-tsang v. Lee Yuk-har(1) has been adversely criticized. And, in my view, the provisions of the Societies Ordinance have effectively precluded real justice being done in this case. I can only hope that common sense and fair play will prevail, that the parties will take competent legal advice and act on that advice, for as it is the courts simply cannot help. 11. The action is dismissed. Even though the question of illegality was not raised by the defendants, but by the court, in view of the defendants' lack of merits I make no order as to costs.
(1) (1972) H.K.L.R. 1 (2) (1885) 6 N.S.W. Eq. 123 (3) (1879) 11 Ch. D. 170 (4) (1926) Ch. D. 657 (5) (1855) 69 E.R. 552 Representation: Mr. John Cheung instructed by Howell & Lo for plaintiffs Mr. Ronald Tang instructed by Raymond Tang & Co. for defendants |