Liu Hong Keung v. Liu Ching Leung

HCA 4173/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4173 OF 2002

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BETWEEN

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Before: Deputy High Court Judge Gill in Chambers

Date of Hearing: 29 July 2005

Date of Judgment: 5 August 2005

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J U D G M E N T

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1.This action began life as a claim by the registered owner of land for the possession of the land from the former tenant.

2.The land in question is a parcel of some 5,000 square metres of agricultural land in the New Territories.  The registered owner is the statutory manager of the Tai Wong Temple which is a Tso; that is, an unincorporated association of persons sharing a common ancestor surnamed Liu.  The current manager duly elected by the membership holds office and title under section 15 of the New Territories Ordinance.  Currently, there are about 325 members of the Temple of whom about 260 are adult and eligible to vote.  Many have left the area and are living in urban Hong Kong or elsewhere in the world.

3.The defendant and former tenant of the land is also called Liu and has commercial interests in the area, but he is not a member of the Temple.  For a decade he rented the land, that is from July 1989 to June 1999, under various tenancies at various rates of rent.  He used most of the land for storage of containers and the like, and with leave of the landlord paved some of it.  The tenancies, and in particular, that one terminating in June 1999 required him on giving up possession to restore the land to its original state.

4.In early 1999 the plaintiff as manager and the defendant attempted negotiations for a new tenancy, but were unable to agree terms.  The defendant, purportedly to honour his obligation to restore the land, engaged in May 1999 a contractor to break up the paving and asphalt and remove it from site.  The plaintiff, representing the Temple, professed not to be satisfied; in particular, his complaint was and remains that the contractor left a large amount of broken concrete and asphalt slabs and other debris on site.  The defendant declined to take any remedial action and the plaintiff issued these proceedings.

5.Although the claim for possession is still alive in the pleadings, it really is now concerned with the Temple being adequately compensated for loss suffered by the defendant having left the land in a poor state of repair.

6.The matter came on for trial in April this year, scheduled to run for four days.  The plaintiff was in the witness box on the first day when minutes of meetings of the Temple not hitherto disclosed emerged.  The defence through counsel, Mr Chain, took the point that the minutes revealed that the plaintiff may have been prosecuting the case without apparent authority of the rank and file members.  He sought and was given leave to file an application to strike out or stay the proceedings.  The application was made on the ground that the proceedings were an abuse of process, or frivolous or vexatious.  With that application opposed, I was obliged to adjourn the trial to enable evidence to be called and the strike out application to be argued.

7.That is the matter now before me.

8.The application, brought under Order 18 rule 19 RHC and the Court’s inherent jurisdiction is framed as follows:

The defendant applies for an order that:
1.	These proceedings be struck out or stayed on the ground that it is an abuse of the Court’s process or otherwise frivolous and vexatious, in that:
	(a)	it is against the wishes alternatively without the support of the majority of the members of the Tai Wong Temple; and/or
	(b)	that the claim for damages representing the costs of reinstating the land to agricultural land which is the only claim now before the Court is, on the facts, not made bona fide and therefore also an abuse of process….

9.The defendant in his supporting affidavit stated that minutes not hitherto disclosed were given to him by Liu Lai Keung, a member of the Temple, which he said indicated that the prosecution by the plaintiff for restoration of the land was prima facie against the wishes of, or alternatively, not supported by the members of the Temple and was not a bona fide claim.  The plaintiff for his part deposed to the power that vested in him as statutory manager of the Temple, to protect the interests of the Temple.  He stated he was duty bound to go after the defendant for breach by the defendant of the tenancy, facing personal liability if he failed in that duty.  When, in 1999, a meeting was called to determine the view of the members, it was resolved that he should sue and he did so, after first taking legal advice and engaging experts and otherwise preparing his case.  He also queried the bona fides of the association member who had alerted the defendant to prospective disquiet in the membership, that is Liu Lai Keung.  He said that Liu Lai Keung and the defendant are respectively the director and chairman of the local school and have known each other for a long time.  He also put forward a list of Liu Lai Keung’s immediate family, many of whom hold a position in or are employed by the school or related organisations.  Disputing that the majority of the members were opposed to a continuation of the litigation, he proffered that if he neglected in his duty to pursue his prosecution, he would be exposing himself for blame by those who voted for him to proceed.

10.Then there was a material development; the filing by the defendant of another affidavit just prior to this hearing, in which he deposed that Liu Lai Keung had told him that he and other members had by petition dated 22 July 2005 (one week before the hearing) filed a petition calling for the removal of the plaintiff as Szi Li (manager) alternatively that the Temple be wound up.  He exhibited a copy of the petition.  The petitioners are Liu Lai Keung and four other members, including members of his family.

11.The petition lists alleged shortcomings by the plaintiff; particularly, for prosecuting the action against the defendant contrary to the Temple’s majority view.

12.The petition has been listed in the call over list for 12 October 2005.

13.Mr Chain for the defendant submitted that it would be entirely inappropriate for the trial to continue whilst there was at large such concern in the membership rank and file in the form of a petition to remove the plaintiff from office.  In the circumstances, he opted for a stay of the proceedings until the outcome of the petition which could then determine future conduct.

14.In considering the application for strike out or stay, it is incumbent upon me to address the principles to be applied in exercise of Order 18 rule 19 and the Court’s inherent jurisdiction.

15.First is that the power must be exercised only in plain and obvious cases.  There should be no trial on affidavits.  Disputed facts are to be taken in favour of the party whose pleadings are sought to be affected.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the Court will strike it out; see the White Book, 18/19/4.  Whilst this high threshold is advanced for striking out applications, I see no reason to differentiate those from applications to stay, put forward on the same grounds, which effectively are to prevent a party from advancing his claim or at least to delay it.

16.Secondly, a case which is said to be frivolous or vexatious must be obviously so, or obviously unsustainable.  A proceeding is frivolous when it is not capable of reasoned argument, is without foundation or cannot possibly succeed.  It is vexatious when it is oppressive or lacks bona fides; WB 18/19/8.

17.Thirdly, abuse of the process of the Court means where the proceedings are not bona fide, where the claim is a sham, where the party has improperly made use of the Court’s machinery to advance a claim that is without substance; WB 18/19/10.

18.Fourthly, the Court’s inherent jurisdiction to stay or dismiss an action is available to it when the action is obviously frivolous or vexatious, to be exercised in exceptional circumstances where it is perfectly clear that the plea cannot succeed; WB 18/19/13.

19.With these markers laid down, I turn to consider the matter before me.

20.The plaintiff is in an invidious position.  There is no question about the validity of his appointment as manager, nor of his obligation to the members to protect the interests of the Temple.  There is no suggestion that he prosecuted then advanced the case against the defendant for improper motive; on the contrary, he has done so upon legal advice and having obtained experts’ reports and so on, and upon proper notice to the membership.

21.It is not for me to gainsay the result.  That is never possible in defended litigation.  Suffice to say, there is no indication that this is not a bona fides case.  There is, clearly, a faction in the membership that is dissatisfied with the plaintiff in pursuing the case against the defendant.  And the apparent connections between this faction and the defendant are not lost on me.  In any event, to say that this faction represents the majority of the members is simply not supported by any evidence that is before me.  That membership, at large, should not be disadvantaged and the defendant advantaged by this vocal few.

22.In my view and as I find, the defendant has fallen far short of the high threshold that the rules demand should be reached before the Court may exercise its discretion to strike out or stay these proceedings and I decline to grant the application which is thus dismissed.

23.This application as I find should not have been made.  If Liu Lai Keung believed he had a legitimate grievance against conduct of the plaintiff, then it should not have been advanced by his entering as he did the camp of the Temple’s adversary.  If lack of bona fides is an issue at all, it is in the conduct exhibited by him and his family members.  In the exceptional circumstances now evidenced, the defendant as party to this misconduct should, I believe, be penalised in the costs order that I propose.  I should say as I did to counsel that this order will be nisi with leave to either side to return to argue it.

24.Costs of this application and wasted because of the consequential adjournment of the proceedings are to the plaintiff on an indemnity basis to be taxed and paid forthwith.

25.There remains for me to order directions.  The trial is to be re-fixed on the first available date before me in consultation with counsels’ diaries, five days to be reserved.

Mr J. Vaughan, instructed by Messrs David Y.Y. Fung & Co, for the Plaintiff

Mr B. Chain, instructed by Messrs K.C. Ho & Fung, for the Defendant