Tang Kan Yip v. Tang Lik Yuen

DCCJ 841/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 841 OF 2006

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BETWEEN

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Coram: Her Honour Judge C.B. Chan in Chambers

Date of Hearing: 27^th April 2006

Date of Handing Down Decision: 24^th May 2006

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DECISION

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1.This is an application by Amended Summons by the Plaintiff under Order 29 r.1 of the Rules of the District Court and Section 52 of the District Court Ordinance Cap 336 for the following:

1. the Defendant be restrained from dealing and/or parting with the Converted Property and Trespassed Property, as set forth in the Re-amended Endorsement of Claim;

2. the Defendant do deliver up the said Converted Property and Trespassed Property to the Plaintiff forthwith;

3. the Defendant be restrained from:

(a) holding or continuing to hold himself out as the Duty Manager of the Plaintiff;

(b) holding or continuing to hold himself out as being authorized to represent the Plaintiff;

(c) collecting rent from the tenants of the Plaintiff, or otherwise dealing in or with the administration, day-to-day operation and business of the Plaintiff, save in exercising his rights as member of the Plaintiff consistent with and only with such membership rights.

Until further order.

2.In the Endorsement of Claim filed by the Plaintiff in this action, it is pleaded that the Plaintiff, Tang Sung Kok (also known as Tang Shung Kok Tso), (hereinafter “the Tso”) is an ancestral worship trust and/or clan and/or family and/or T’ong within the meaning and purposes of Section 15 of the New Territories Ordinance, Cap. 97.  The Plaintiff is the registered Manager of the Tso having, inter alia, the powers and liabilities set out under the said Section 15.

3.The Manager of the Plaintiff was and is Tang Kan Yip.  He was duly appointed by the members of the Plaintiff on 3^rd August 1989.

4.The Defendant was appointed as the Duty Manager of the Plaintiff, an ancestral worship trust or “Tso” in or about 2001.  The office of Duty Manager is voluntary and does not attract any remuneration.

5.It is the Plaintiff’s case that the function of the Duty Manager is to assist the Manager in the administration, day-to-day operation and business of the Plaintiff, including the preparation of accounts for presentation to the members of the Plaintiff at annual audit meetings convened by the Duty Manager and the collection of rental income from the Plaintiff’s tenant.

6.In the discharge of his functions the Defendant kept in his possession certain documents and property of the Plaintiff including chops, keys to vacant properties of the Plaintiff, and documents such as minute books of meetings, cheque books, bank books.

7.In paragraph 5 of the Endorsement of Claim the Plaintiff seeks a declaration that the appointment and/or engagement and/or office of the Defendant as the Duty Manager of the Tso was lawfully terminated by a resolution of the members of the Tso lawfully convened on 22 January 2006.

8.From the aforesaid, it is clear that the contention between the Plaintiff and the Defendant which will be resolved at the trial of the action is whether the appointment of the Defendant as the Duty Manager was lawfully terminated by a resolution of the members of the Tso by a meeting on the 22 January 2006 and whether the said meeting of the Tso on the 22 January was lawfully convened.   

9.The injunctions sought in the Amended Summons are pleaded in the Endorsement of Claim.

10.It is not in dispute that a meeting of members of the Tso are convened by the posting of notices posted on the outside wall at the entrance of the building where the Plaintiff’s office is located.

11.It is common ground that at an annual meeting of members to review the accounts of the Tso, the business conducted at the meeting would include the review of the accounts, the declaration of a dividend to the members and the appointment or re-appointment of the Duty Manager.

The Disputed Facts

The Plaintiff's Case

12.On 10 January 2006 at about 10.00 a.m. the Defendant entered the said Building with 8 members of Tso.  He and two members went to the Plaintiff’s office where one Mr. Lai Fai was.  He was at the material time, employed as a secretary of the Plaintiff.  The Defendant indicated to the Plaintiff his intention to hold an audit meeting for 2005 despite the fact that no notice had been posted in advance.

13.The Defendant then requested Lai Fai to prepare a notice of the meeting and backdate it to 6 January 2006 for the purpose of the audit.  Lai Fai refused to backdate it but the Defendant instructed him to do so saying it was none of Lai Fai’s business that it was backdated.  Since the Defendant was the duty Manager Lai Fai obeyed.

14.The Defendant asked Tang Kai Wing to post the notice on the board.  Subsequently, however, Lai Fai noticed that there was no notice on the outside of the building.

15.At about 10.15 a.m. the Defendant telephoned the Manager requested him to attend the meeting.  In the meantime Lai Fai was asked to draw up minutes of the meeting recording that:

(i) the audit had been completed;

(ii) the figures were clear to all members present;

(iii) each male member would receive a dividend of HK$5,500; and

(iv) Tang Lik Yuen (the Defendant) would continue to be the duty manager of the Plaintiff.

16.However, no formal meeting was held nor was any audit in fact carried out.

17.While Lai Fai was preparing the above minutes he heard the Defendant call the Manager again urging him to come at once.

18.At about 10.30 a.m. the Manager arrived, the Defendant then asked Lai Fai to read out the minutes.  After Lai Fai finished doing so, the Defendant asked the Manager to sign the minutes.  The Manager refused and said that he would not sign if the audit meeting was conducted in such a manner.  He then left.

19.As a result, at the request of certain members, a meeting was convened on 22 January 2006, due notice of which was given to all member by the posting of a notice on the outside wall of the Plaintiff’s office on 11 January 2006.

20.The Defendant reacted to the said notice by a letter of 20 January 2006 addressed to the Manager in which he refused to attend the meeting.  He did not contend that the meeting was unlawfully convened.

21.At the meeting on 22 January 2006 the 37 members present unanimously resolved that the Defendant be removed from his office as duty manager with immediate effect; Mr. Tang Dok Wah be appointed in his place and the Defendant should return all property of the Plaintiff including but not limited to the books and accounts, passbooks, chops and other documents of the Plaintiff (the “Converted Property”).

22.After the meeting Lai Fai posted a notice on 26 January 2006 informing all members of the Plaintiff and all tenants of the Plaintiff’s properties of the resolutions.

23.Following the meeting the Manager also instructed Messrs. Paul W Tse, solicitors to give a notice dated 24 January 2006 to the Defendant informing him that he had been removed from his office with immediate effect and requesting him to deliver all documents and property of the Plaintiff in his possession to the firm.  The documents and property in the Defendant’s possession at the time included the Converted Property.

24.On 26 January 2006 at about 2.30 p.m., the Defendant went to the Plaintiff’s office and without prior approval of the Plaintiff took packs of blank pre-printed envelopes, letterheads and rental receipts, a list of tenants and a correspondence file including documents such as tax returns, electricity bills etc.

25.Both the Manager and the secretary made reports to and  statements to the police on 27 January 2006 and 4 February 2006 respectively.

26.On 28 January 2006 the Defendant wrote to all the tenants of the Plaintiff in which he unlawfully continued to hold himself out as the duty manager of the Plaintiff and demanded the tenants pay him rental in respect of the Plaintiff’s tenanted properties.

27.Furthermore, through a letter of 8 February 2006 from the Defendant’s solicitors to Messrs. Paul W Tse, the Defendant declined to co-operate and declined to return the requested documents and property.

The Defendant’s Case

28.The Defendant’s case is that he validly convened the meeting on the 10^th January 2006 by a notice posted at the notice board of the office of the Tso on 6 January 2006.   This said notice is at pages 189 and 190 of the Bundle.  He stated in short, that at 10 a.m. on the 10 January 2006 he arrived at the office of the Tso but he did not see the Plaintiff whilst some of the members of the Tso already arrived.  He invited the members to inspect the accounts, the Accountant’s Report for 2005 and the Rental Records.   Tang Kay Wing and Tang Hoi Wo proceeded to check the books with a calculator.  During the inspection and audit the Plaintiff finally arrived.  He did not sign the Minute Book.  He proposed the divided for 2005 at $5,500 per member to be paid on 14 January 2006.    He was reappointed as the Duty Manager for the following year.   He instructed the Secretary Lai Fai to enter these in the Minute Books in the presence of the Plaintiff.   He invited the Plaintiff to witness the proceedings by signing the Minutes but the Plaintiff said that it should not be necessary for the Plaintiff as the Manager to sign in this Annual Audit Meeting.   He instructed the Secretary to write that.  

29.The Defendant’s position is that the Plaintiff was well aware of the Annual audit meeting before it was held on the 10 January 2006.  He was present thereat and he witnessed its proceedings and its Minutes were recorded by the Secretary.   He stated that he was of the view that the annual audit meeting was a valid meeting and his re-appointment was valid and binding.

30.The Defendant’s position is that the resolution of the members present at the meeting on the 22 January 2006 to remove him as Duty Manager was invalid as the notice did not state that the matter of his removal from office would be discussed.    It was also contrary to natural justice as the Defendant and other members were not alerted to the discussion of this issue and therefore were not alerted to attend to voice their views and to vote in relation to this resolution.   

The Cause of Action

31.The Plaintiff’s cause of action is founded upon claims in Conversion/Detinue, Trespass and Wrongful Interference.

32.The Plaintiff’s Counsel submitted that the essence of the wrong is the unauthorized dealing with the claimant’s chattel so as to question or deny his title to it.

33.He submitted that the ordinary way of showing a Conversion (or Detinue) by unlawful retention of property is to prove that the Defendant, having it in his possession, refused to surrender it on demand.  Indeed such a demand is generally a pre-condition of the right of action in detention.

34.The Plaintiff’s case is also based on Trespass.  Trespass is the direct immediate interference with the claimant’s possession of a chattel – involving physical contact.

35.The Plaintiff’s Counsel submits that the Plaintiff has made out its case on Conversion/Dentine and Trespass in relation to its property in the sense that it has a prospect of success at trial.

Serious Issue to be Tried

36.According to the Plaintiff’s Counsel the Issue to be tried is whether the Plaintiff has made out a case of Conversion/Detinue and Trespass in respect of the property which had been taken by the Defendant.  If the Plaintiff succeeds in this, the Defendant has to return the Trespassed Property and the Converted Property as claimed in paragraphs 1 and 2 of the Summons.

37.On the other hand, the Defendant’s Counsel seeks to argue that the issue relevant to the application is the validity of the removal resolution that was passed at the meeting of the 22^nd January 2006.   His argument is that even based on the Plaintiff’s case the proper procedure to remove the Duty Manager is stated in paragraph 16 (d) of the third affirmation of the Plaintiff at page 265 of the Bundle which states,

“Removal of the Duty Manager must be at the instance of the members at a duly convened members’ meeting (which does not need to be an annual audit meeting).”  

38.The Defendant’s Counsel submits that a “duly convened members’ meeting” must entail the giving of proper prior notice of such meeting.   The Plaintiff in his affirmation stressed that the notice of the annual audit meeting must be posted at least one week in advance.   The Defendant’s Counsel submits that the giving of prior notice plays an indispensable role according to the Plaintiff’s case at least for an annual audit meeting. 

39.The notice of the meeting of 22 January 2006 did not state that one of the matters to be considered was the removal of the Defendant as Duty Manager and the appointment of another to replace him.   The Defendant’s Counsel submits that it could not be disputed that the principle of natural justice applies to the removal of the Duty Manager in the present context.    He relies on Li Tang-shi v Li Wai Kwong and Another [1969] HKLR 367 at 387-388, which held that the principles of natural justice applied to the removal of a Manager of a Tso.   There is no reason according to him as to why the same would not apply to a Duty Manager of a Tso. 

40.The Defendant’s Counsel refers to paragraph 38 at p38 of Shackleton on The Law and Practice of Meetings (10^th edn, 2006), which states,

“A notice to be valid, must clearly state the business to be transacted at the meeting and give all material information to enable it to be fully understood.”

41.He relied on Young v Ladies Imperial Club [1920] 2 KB 523, which was the case cited and this case was applied by the Malaysian Court in Florence Bail es v Dr Ng Jit Leong [1985] 1 MLJ 374.

42.The Defendant’s Counsel referred to the Plaintiff’s explanation in his third affirmation at page 267 of the Bundle, for not mentioning the intended removal of the Defendant as Duty Manager in the notice of meeting dated 11 January 2006 was because it was not contemplated at the time of giving the notice that the Defendant would be removed.  It only came about when in the course of the meeting on the 22 January 2006, the members declared the meeting on the 10 January was not validly convened and that the Defendant had failed to produce proper accounts for 2003, 2004 and 2005 for audit purposes.

43.The Plaintiff’s Counsel submits that the notice of meeting dated 11 January 2006 for the meeting on 22 October 2006 stated that the meeting was for the purpose of re-convening the members’ meeting for audit of the accounts for the year ended 2005.   Hence it was in the nature of a meeting to audit the annual accounts.    It was the same meeting but re-convened.   Hence the notice would suggest that one of the issues for discussion would be the appointment or re-appointment of the Duty Manager.    Further, the role of the Duty Manager is in the nature of an agent of the Manager and the Tso and such role could be revoked without the necessity of a properly convened meeting.   However this submission, that the role of a Duty Manager being that of an agent, could be revoked without notice, is not in line with the evidence of the Plaintiff referred to aforesaid.   The Plaintiff stated in evidence that it was the custom that the removal of a Duty Manager is done at a duly convened meeting of the members.  

44.The Defendant’s Counsel submits that the Defendant has a real chance of success at the trial in relation to the issue related to the validity of the removal of the Defendant from his office by the Plaintiff.  The Defendant’s case is that since the annual meeting to audit the accounts had been convened on the 10 January 2006, therefore the meeting on the 22 January 2006 could not be an annual meeting to audit the accounts.  The Defendant’s Counsel submits that as the Duty Manager had been appointed on the 10 January 2006 for the year, the meeting convened on the 22 January 2006 could not be for that purpose and the meeting on the 22 January 2006 resolved the removal of the Duty Manager, which had been appointed for the year.   Paragraph 5 of the Minutes of the Meeting on 22 January 2006 at page 49 of the Bundle state that a resolution was passed that declared the audit meeting held on 10 January 2006 invalid.   This item of discussion again was not an item notified in the Notice of 11 January 2006 because as explained by the Plaintiff in his Third Affirmation the reason was this was something that came about in the course of the meeting.  

45.The Defendant’s Counsel further submits that the evidence also disclose a factual dispute between the Defendant and the Plaintiff related to whether there was a validly convened meeting on 10 January 2006 in the manner as described by the Defendant in his Affirmation or whether there was no validly convened meeting on 10 January 2006 as stated in the Affirmations of the Plaintiff and the secretary Lai Fai at pages 82 to 99 of the Bundle.

46.In paragraph 29/1/9 at page 513 of the Hong Kong Civil Procedure 2006 in the paragraph headed “Principles – serious question to be tried”, (3) thereof states,

“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations.  These are matters to be dealt with at the trial.”

In (7) and (8) of the aforesaid paragraph, it states,

“(7) The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial.

(8) The court must weigh one need against another and determine where, “the balance of convenience” lies.”

47.On the other hand, the Plaintiff’s contention is that the issue for paragraphs 1 and 2 of the summons on which the grant of this application is based is whether the Defendant is liable in Conversion/Detinue and Trespass in respect of the Converted Properly and Trespassed Property.   The Defendant as Duty Manager has no right to retain Converted or Trespassed Property and to keep them in his exclusive possession despite demand by the Plaintiff in his claimed position as Duty Manager as these items belong to the Tso.  As such they cannot be retained by the Duty Manager in his exclusive possession when such are demanded to be returned to the Tso.  If the Duty Manager’s responsibility is to assist the Manager in his duties and function, as alleged by the Plaintiff, what the Duty Manager seeks to do in retaining these properties is to work independently of the Manager and set up his own office independently from that of the Manager. 

48.The Defendant seeks to assert that the function and duties of the Duty Manager of the Tso is to manage and maintain the portfolio of properties of the Tso which is registered in the name of the Manager on behalf of the Tso.  His duties are like that of a property manager related to the properties and their tenancies.  He also is responsible for conducting and managing the biannual acts of worship and looking after the record of male members of the Tso.   He has the responsibility to manage the financial matters and accounts and holds the office of a financial controller.  For that reason he retains the minute books, other books, the chops for bank signatory, rental records, the bank passbooks of the bank accounts of the Tso, and 3 cheque books.   He also has the function of hosting the annual audit meetings and to present books, rental records and accounts of the Tso and propose the annual dividend at the Annual Audit Meeting.   

49.All this is challenged by the Plaintiff in paragraph 4 (c) of his Third Affirmation at page 256 of the BD.   He states that all the most important functions in the administration of the Tso have to be performed by the Manager, he being the person registered under the New Territories Ordinance in respect of the holding of land on behalf of the Tso and all matters relating thereto.  These functions include the hosting of all meetings, the execution of all important documents, for example the assignment of property rental agreements, the signing of cheques for and behalf of the Tso.  The Manager represents the Tso in carrying out the functions of the Tso and is not a merely symbolic head.   He states that the Duty Manager has to perform his duties in accordance with the direction of the Manager.  It is also customary for the Manager to chair all meetings including the annual audit meetings.   The Duty Manager’s task at such meetings is merely to present all the books and source documents and the accounts to enable an inspection and audit of the same.  

50.In these there are serious issues to be tried.  

A Real Prospect of Success

51.Paragraph 29/1/10 at page 514 of the Hong Kong Civil Procedure 2006 state that,

“The prospects of the plaintiff’s success are to be investigated to a limited extent.  All that has to be seen is whether he has prospects of success, which, in substance and reality, exist.  Odds against success do not defeat him; unless that is so long that the plaintiff can have no expectation of success, but only a hope.  If his prospects are so small that they lack substance and reality, then he fails; for he can point to no question to be tried which can be called “serious”, and no prospects of such success which can be called “real” . . . See also Jau Hwa Stewart v. E Excel Ltd & Others, unreported, HCA No. 2493 of 2001, August 30, 2001, [2001] H.K.E.C. 1072.   In Willy Fine Ltd. v. Janyet Investment Ltd (No.2), unreported, HCA No. 4430 of 2001, January 6, 203, [2003] 2 H.K.L.R.D. F5, [2003] H.K.E.C. 316, the court considered a mandatory injunction to recover possession.  In the court’s view, the applicant had to establish a strong prima facie case in that the court must feel a high degree of assurance that, at the trial, it would appear that the injunction was rightly granted.  A higher test may apply in mandatory injunction cases.”

52.There is no dispute that in the case of mandatory injunctions the Court must feel “a higher degree of assurance that at the trial it will appear the injunction was rightly granted”.    Authorities referred to include Shepherd Homes v “Sand Ham [1971] 1 Ch 340 at 351, Lam Wing Mou (a firm) v Lo Kong & Anor [1992] 1 HKLR 60, Music Advance Ltd and Another v The Incorporated Owners of Argyle Centre Phase I, HCA2574 of 2002 (20/8/2002).   

53.The Defendant’s Counsel further submits that the Court must consider the practical realities.  The injunctions will in practice give the Plaintiff the whole of the relief, which he claims in the writ.  The term of office of the of the Duty Manager is for 1 year and there will be another “election” in next January or February after Chinese New Year.  Unless the trial can take place very shortly, the injunctions will in effect, determine the outcome of the action.  He refers to Mak Chi Sing v A & A Continental Commodities Ltd {1983} HKLR 403 at 407G-408A which states that in such circumstances, the Court will not grant any interlocutory injunction unless the Defendant has no real chance of succeeding at the trial.        

54.Although the Plaintiff’s case does have a good prospect of success, I am however not able to say that the Defendant has no real chance of succeeding at the trial.  As far as the adequacy of the notice for the meeting of 22 January 2006 is concerned, the Defendant has an arguable defence.  In relation to the issue whether the Defendant is liable for Conversion/Detinue and Trespass in my view it cannot be said that the Defendant has no real chance of succeeding at the trial.  In view of the principle stated in Mak Chi-sing cited above, in my view the mandatory injunction ought not to be granted as it cannot be said that the Defendant has no real chance of success.  As the mandatory injunctions sought go hand in hand with the prohibitory injunctions sought, I am of the view that this is a case where the application should be refused.  

55.This decision may not be as drastic as it seems for the Defendant’s Counsel has stated on instructions that he concedes that the Duty Manager could be removed at anytime in the course of a year by a properly convened meeting of the members of the Tso and that were the Plaintiff to convene such a meeting, the Defendant would not view it as an admission from the Plaintiff that the meeting on the 22 January was not validly convened.    The Plaintiff may find this to be the best solution to the problems faced by the Tso in having two Duty Managers who both claim to be duly elected.   

56.I dismiss the Amended Summons re-filed on 8 March 2006 and I grant an order nisi for costs in the cause to be taxed if not agreed with Certificate for Counsel.

Representation :

Mr. Jeevan Hingorani instructed by Messrs Paul W. Tse for the Plaintiff.

Mr. Paul Lam instructed by Messrs Lily Fenn & Partners for the Defendant.