The Democratic Party v. The Secretary for Justice

HCAL 84/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 84 OF 2006

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BETWEEN

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Before : Hon Hartmann J in Court

Dates of Hearing : 26 – 28 March 2007

Date of Handing Down Judgment : 21 May 2007

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J U D G M E N T

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Introduction

1.It is provided under the Companies Ordinance, Cap.32, that all companies must keep a register of members.  S.95 of the Ordinance requires that, among other matters, a register must record the names and addresses of all members.

2.It is further provided under the Ordinance that all companies must allow their registers to be inspected not only by persons who are members but also by the public; that is, by ‘other persons’.  Not only may members and other persons inspect the registers, they may require copies of them.  S.98 of the Ordinance, the section which imposes these duties, provides for the imposition of civil and criminal sanctions if any inspection is refused or there is a failure to deliver up any requested copy of a register.

3.The purpose of these statutory requirements is fundamental.  It arises, first, from the fact that a company is a separate legal person from its members, being liable for its own debts, and second, from the fact that the liability of the members is itself limited.  That being the case, it has long been recognised that persons dealing with a company, if they are to trust that company, must be able to know who are its members; in short, who stands behind the company.

4.The linked concepts of separate juristic personality and limited liability may have their genesis in matters mercantile but today not all persons who come together in a body corporate do so purely for the purpose of trading in the market.

5.In 1994, a group of persons sharing common political ideas decided that they could best advance their interests by way of incorporation.  In the result, under the name of the Democratic Party, they chose to be incorporated as a company limited by a guarantee, not having a share capital.  That company is the applicant in this matter.

6.In choosing incorporation, the persons who at the time made up the Democratic Party also chose to order their affairs so that all persons becoming members of the political party would become members of the company.  In short, the decision was made that membership of the political party and of the incorporated body would be one and the same.

7.In the result, upon incorporation, the register of members which the applicant is obliged to keep under s.95 of the Companies Ordinance, became at one and the same time both the register of members of the limited liability company and the register of members of the political party.

8.The consequence, of course, is that any person who wishes to learn the identity of the members of the political party need do no more than exercise his legal right under s.98 of the Companies Ordinance to inspect the applicant’s register of members.

9.The applicant’s members, however, do not accept that, in law, their political beliefs, and their affiliation with others to advance those beliefs, should be permitted to be laid open to the world in this way.  On behalf of its members, the applicant has therefore brought the present application for judicial review.  It has done so on the basis that s.98 of the Companies Ordinance, in so far as it gives to the public at large the legal right to inspect its register of members, undermines two constitutionally protected freedoms enjoyed by its members, the one being integral to the other; first, the freedom to associate with others and, second, the freedom to do so in circumstances in which there is no arbitrary interference with their privacy.

10.On behalf of the applicant it is said that very real inroads into these constitutionally protected freedoms are at stake.  The Democratic Party advances political views that are not free from controversy.  As a consequence, s.98 of the Companies Ordinance, in compelling revelation of the identity of all members, especially rank and file members, may leave those members open to various forms of hostility. 

The factual background

11.The history of this application reveals that, in about mid-2006, the applicant received a number of requests from persons who were not members seeking to inspect and/or obtain copies of its register of members.  It appears that the applicant was concerned as to the purpose behind these requests and did not accede, or did not immediately accede, to them.

12.At about the same time, the Companies Registry received enquiries from the press concerning the requirement of all companies to allow their register of members to be inspected, asking what enforcement action the Registry may take.  On 24 May 2006, the Registrar wrote to the applicant and to two other political parties which had been incorporated.  In the letter to the applicant, it was said that it had been brought to the Registrar’s attention that the applicant’s register may not have been made available for inspection.  The letter continued with what may be described as a polite warning :

“I would like to draw your attention to the provisions under sections 95 and 98 of the Companies Ordinance (the Ordinance) which require every company to keep a register of its members in its registered office and to make the same available for public inspection.

Please be reminded that it is the obligation of the company and its officers to observe and comply with the statutory requirements in various provisions of the Ordinance, including sections 95 and 98, failing which the company and every officer in default will be liable to prosecution …”

13.In light of these developments, the applicant canvassed the views of its current and past members.  A significant number objected to the register being made available for general scrutiny.  Indeed, in his affirmation of 31 July 2006, the applicant’s chairman, Mr Lee Wing Tat, said that ‘subsequently’ 18 members withdrew their memberships.

14.In July 2006, fearing that the Registrar’s warning letter would inevitably be followed by civil or criminal proceedings, the applicant sought leave to apply for judicial review.

15.Although it originally sought wider ranging remedies, in the end result the applicant sought only a declaration to the following effect :

“… that s.98 of the Ordinance, to the extent that it applies to the political parties of Hong Kong which are registered as limited companies under the Ordinance, are inconsistent with arts. 27 and 30 of the Basic Law and arts. 14 and 18 of the Hong Kong Bill of Rights and are unconstitutional.”

The central issue : has a fair balance been struck?

16.On behalf of the applicant, its leading counsel, Mr Erik Shum, accepted that the lawful regulation of corporate bodies may have to result in some diminishment of the fundamental interlocked freedoms of people to associate together in private.  He contended, however, that, in respect of political parties, bearing in mind the special but sensitive role they play in our society, the unrestricted provisions of s.98 are not proportionate to any legitimate aim that the provisions seek to achieve.

17.Tensions of the kind exhibited in this case are not unusual in a modern, democratic society.  What is to be sought, of course, is a fair balance between the demands of the legitimate interests of society and the requirements of the protection of an individual’s fundamental rights.  Whether in any particular case that fair balance is achieved is determined in Hong Kong, as it is in many other jurisdictions, by the use of what is called the proportionality test.

18.In my judgment, this application for judicial review falls squarely to be determined by the use of that test.  I will come to its mechanics later in this judgment.  But, as in the determination of all disputed matters of law, context – legal and factual – is everything.  The context, therefore, must first be set.

Looking to the Companies Ordinance

19.As I have said earlier, a company is a separate legal person from its members.  S.5A of the Companies Ordinance states that a company has the capacity and rights, the powers and privileges of a natural person.  It may do anything which is permitted by its memorandum of association.

20.Once created, a company becomes a separate legal person from its members; it becomes a body endowed with perpetual succession.  S.16(2) of the Ordinance states that :

“From the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Ordinance.”

21.In terms of s.28 of the Ordinance, the members of a company are those persons who initially subscribe to its memorandum and those who subsequently agree to become members and have their names entered in the company’s register of members.  It is the act of entry into the register which constitutes both the taking on of membership and proof of that membership.

22.The sections of the Companies Ordinance of immediate relevance in the present matter are ss.95 and 98.

23.Under s.95, every company is required to keep a register of members.  The register must contain specific information concerning the members.  In this regard, s.95(1) directs that the register must contain :

(a)      the names and addresses of the members, and in the case of a company having a share capital a statement of the shares held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member;

(b)      the date at which each person was entered in the register as a member;

(c)      the date at which any person ceased to be a member:”

24.It is important to recognise that information concerning those who have ceased to be members must be retained on the register and may only be destroyed after 30 years : see s.95(1)(c)(ii).

25.The applicant does not challenge the constitutionality of the requirement to keep a register.  The keeping is not its concern.  Its concern is the obligation under s.98 to make the register available to all persons, whatever their purpose.  In this regard, s.98(1) lays down the requirement to make the register available for inspection.  In so far as relevant, it reads :

“… the register, and the index of names, of the members of a company shall during business hours be open to the inspection of any member without charge and of any other person on payment of the appropriate fee …”  [my emphasis]

26.S.98(2) lays down the requirement to deliver a copy of the register to any person who asks for it.  It reads :

“Any member of other person may require a copy of the register, or of any part thereof, on payment of the appropriate fee specified in the Fourteenth Schedule, or such less sum as the company may prescribe.  The company shall cause any copy so required by any person to be sent to that person within a period of 10 days commencing on the day next after the day on which the requirement is received by the company.”  [my emphasis]

27.To refuse inspection or to refuse to deliver up a copy of the register may have criminal consequences.  S.98(3) states :

“If any inspection required under this section is refused or if any copy required under this section is not sent within the proper period, the company and every officer of the company who is in default shall be liable in respect of each offence to a fine and, for continued default, to a daily default fine.”

28.There may be civil consequences too.  S.98(4) directs that :

“In the case of any such refusal or default, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the persons requiring them.”  [my emphasis]

29.It is important, I think, to emphasise that the provisions of ss.95 and 98 apply to all companies irrespective of whether they are public or private and irrespective of their primary objects.  The Companies Ordinance does not seek to regulate the nature of what companies may seek to do provided what they seek to do is lawful.  The regulatory scheme contained in ss.95 and 98 applies therefore to companies in so far as they are companies.

The purpose of s.98

30.The register of members is a fundamentally important document because it is the document which proves the identity of the members of a company.  As for the members, they are the persons who stand behind a company.  They constitute the flesh and blood, the character of a company; they constitute its will.  It is unlikely that a potential creditor, donor, partner or associate will place trust in a company if he can place no trust in its members.

31.It is for this reason that the Ordinance not only requires that every company must keep a register of members but that the register should be open to public scrutiny.  In England, this requirement for public scrutiny was first contained in an Act of 1862.  Shortly thereafter, Lord Cranworth, in his speech in Oakes v. Turquand and Harding (1867) LR 2 HL 325, at 366, explained the legislative intention behind the requirement in the following terms :

“There is a similar obligation in the Act of 1862 as to keeping a register; but there is an important change; for, by the 32^nd section of that Act, it is provided that the register shall be open to the inspection not only of shareholders, but, on payment of one shilling, of all other persons, which would therefore include creditors.  This seems to me strongly to indicate the intention of the Legislature that the creditor were to look to this document as shewing them to what extent they might trust the company.  Before the introduction of the principle of limited liability such a power of inspection was not necessary, or, certainly, not at all so necessary.  A creditor could hardly fail to know who were some at least of the shareholders, and there was no limit to the extent to which he might obtain execution against shareholders of wealth.  But when the Legislature enabled shareholders to limit their liability, not merely to the amount of their shares, but to so much of that amount as should remain unpaid, it is obvious that no creditor could safely trust the company without having the means of ascertaining, first, who the shareholders might be, and, secondly, to what extent they would be liable.  This is obviously the reason why the new statute opened the register to the inspection of all the world, indicating, as I think, very clearly that persons dealing with the company might trust to that register as containing a true exposition of the assets they had to rely on.”  [my emphasis]

32.During the course of submissions, it was suggested by Mr Erik Shum, leading counsel for the applicant, that the only valid reason why a register of members should be made open for inspection had to be commercial in nature.  Essentially, he said, it was for the protection of persons who were, or stood to be, creditors.  In my judgment, having regard to the fact that all manner of companies are incorporated today, that submission goes too far. 

33.In his written submissions, Mr Benjamin Yu SC, leading counsel for the respondent, set out why it is that knowing who stands behind a company is important, not only for those who stand in the relationship of creditor to a company but for others too.  I can do no better than adopt his words.  It is natural, he said, that a third party who wishes to have dealings with a company – no matter of what nature – may wish to ascertain who lies behind, and is protected by, the corporate front.  A third party may wish to know whether he agrees with the philosophy of the persons behind a company; whether the company is backed by many or few members; whether the members include particular persons, and so on.  He may wish to have this information prior to dealing with the company, or even after having entered into relations with the company.  He may wish to have this information when considering, for example, whether to make a donation to a company or take legal action against the company.

The applicant too has commercial objects

34.In any event, as Mr Yu emphasised, the members of the applicant do enjoy the benefit of limited liability in respect of commercial matters.  That is because the applicant’s memorandum of association, in addition to setting out objects of a political nature, sets out a substantial number of objects which enable it to act in the economic sphere.  These objects are, in part, listed in para.3(q) of the memorandum of association as follows :

“(i)    to accept and receive donations, subscriptions and gifts from persons, corporations or organizations for any one or more of the objects set out in the foregoing and to give receipts therefor;

(ii)     to organize fund-raising projects and activities to promote, demonstrate, support and carry out any of the above objects and to pay and discharge payments and expenses incurred for such projects and activities;

(iii)    to organize campaigns and activities to promote, demonstrate, support and carry out any of the above objects and to pay and discharge payments and expenses incurred for such campaigns and activities;

(iv)   to purchase, sell, lease, mortgage, improve, manage or otherwise dispose of or deal in land, houses or other properties, whether leaseholds or otherwise and whether movable or immovable;

(v)    to borrow any money required for the purposes of the Party with or without security;

(vi)   to hire and employ all classes of persons necessary or expedient for the purposes of the Party and to pay them in return for the services rendered to the Party, salaries, wages, allowances and pensions in accordance with the laws governing employment for the time being in force in Hong Kong;

(vii)  to invest and deal with the money of the Party which is not immediately required in such manner as may from time to time be thought fit …”

35.It will be seen, therefore, that the memorandum of association anticipates the applicant receiving donations, borrowing money and entering into commercial agreements; in short, with the benefits of incorporation, participating in financial and commercial ventures of various kinds.

36.As to the issue of the members enjoying limited liability, para.6 of the memorandum of association reads :

“Every member of the Party undertakes to contribute to the assets of the Party, in the event of the same being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts or liabilities of the Party contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories amongst themselves, such amounts as may be required, not exceeding HK$10.00.”

37.On the basis, therefore, that the applicant can, and no doubt does, use its corporate personality to advance not only its political objects but also its economic interests, Mr Yu submitted that there are good reasons why the provisions of s.98 of the Companies Ordinance should apply to it just as those provisions apply to all other corporate bodies.

Turning to the constitutionally protected freedoms

38.The applicant, as I have said, has based its application on the assertion that s.98 of the Ordinance – in so far as it applies to itself as a political party – is inconsistent with its members’ freedom of association and freedom from arbitrary or unlawful interference with their privacy.

39.The two freedoms are to be read together, the one being essential to the other, because, of course, what is asserted by the applicant is that s.98 is inconsistent with the freedom of its members to associate together because it is inconsistent with their freedom to do so in private.  In this regard, in National Association for the Advancement of Coloured People v. Alabama 357 U.S.449 (1958), the United States Supreme Court spoke of the vital relationship between freedom of association and privacy in one’s associations.  It went on to observe that ‘inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs’.

40.In considering these two freedoms in context, it must be recognised that political parties are a form of association essential to the proper functioning of an open, democratic society.  In United Communist Party of Turkey v. Turkey (1998) 26 EHRR 121, the European Court of Human Rights observed :

“In a democratic society, the aim of political parties is to enable citizens to express their views on all the problems facing the country, and to suggest concrete solutions which a government could adopt.  This is applicable not only to opinions which are favourably received or regarded as inoffensive or as a matter of indifference, but also to those which offend, shock or disturb; such are the demands of that pluralism, tolerance and broad-mindedness without which there is no ‘democratic society’.”

Freedom of association

41.As to the fundamental right of freedom of association, art.27 of the Basic Law states that :

“Hong Kong residents shall have freedom of speech, of the press and of publication; freedom of association, of assembly, of procession and of demonstration; and the right and freedom to form and join trade unions, and to strike.”

42.Art.27 is complemented by art.18 of the Bill of Rights.  The Bill of Rights is the incorporation into Hong Kong domestic law of the International Covenant on Civil and Political Rights (‘the ICCPR’).  That incorporation is constitutionally recognised by art.39 of the Basic Law.  Art.18 itself, which is drawn in exact terms from art.22 of the ICCPR, provides that :

“(1)   Everyone shall have the right to freedom of association with others, including the right to form and join trade unions for the protection of his interests.

(2)   No restrictions may be placed on the exercise of this right other than those which are prescribed by law and which are necessary in a democratic society in the interests of national security or public safety, public order (ordre public), the protection of public health or morals or the protection of the rights and freedoms of others….”

43.The European Convention on Human Rights guarantees freedom of association.  The jurisprudence of the European Commission (Association X v. Sweden I DR 1 (1978) E Com HR) defines the phrase as constituting a ‘general capacity for citizens to join without interference by the state in association in order to attain various ends’.  Those various ends, manifestly, include political ends.

44.In its judgment in National Association for the Advancement of Coloured People v. Alabama, the United States Supreme Court recognised that ‘effective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association’.  The Court went on to observe that :

“It is beyond debate that freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the ‘liberty’ assured by the Due Process Clause of the Fourteenth Amendment, which embraces freedom of speech.”

45.That being said, in respect of commercial activities, limitations on freedom of association which are necessary to protect the rights of others have been accepted as lawful.  Some of the oldest recorded laws concern the regulation of the market place to ensure fairness.  It is also one of the marks of a modern democratic society that its commercial markets, especially its financial markets, are transparent.  In his commentary on the International Covenant on Civil and Political Rights, Dr Nowak has said (para.396) :

“With economic associations, all legal restrictions and ordinances under the commercial and trade law of the various socio-economic systems of the States Parties are permissible to protect the rights and freedoms of others (including property rights) to the extent that they may be deemed necessary in a democratic society.”

46.While therefore the right to freedom of association is a fundamental constitutional right, it is not an absolute right.

47.In Leung Kwok Hung and Others v. HKSAR (2005) 8 HKCFAR 229, the Court of Final Appeal, in considering the right to freedom of assembly, held that it was closely related to and overlaps with the freedoms of association, procession and demonstration.  In the constitutional context, the Court held that there was no difference between the right of peaceful assembly guaranteed by the Basic Law and that provided for in the Bill of Rights.

48.By comparing the provisions of the Basic Law and Bill of Rights concerning freedom of association with the provisions in respect of freedom of assembly, I am satisfied that I can come to the same determination in respect of freedom of association; namely that there is no difference between the right guaranteed by the Basic Law and that provided for in the Bill of Rights.

49.Accordingly, as a right that is not an absolute right, freedom of association, whether under the Basic Law or the Bill of Rights, may be subject to restrictions provided two requirements are satisfied :

(i)        The restriction must be prescribed by law.

(ii)       The restriction (following the wording of art.18(2) of the Bill of Rights) must be necessary in a democratic society in the interests of national security or public safety, public order (ordre public), the protection of public health or morals or the protection of the rights and freedoms of others.

50.The first requirement; namely, that the restriction must be prescribed by law, presents no difficulties.  The provisions of ss.95 and 98 of the Companies Ordinance have been accessible to the public over a long period of time.  They are worded in precise, plain language.

51.The second requirement presents more difficulties.  Its determination is the core issue in this matter.  In respect of associations, such as political parties which choose to incorporate, do the provisions of s.98 achieve a fair balance between the legitimate interests of society and the requirement to protect fundamental freedoms accruing to every individual?  That question, as I have said earlier, requires the application of the proportionality test.

The formulation of the proportionality test in the present case

52.In Leung Kwok Hung and Others v. HKSAR, the Court of Final Appeal, in respect of the right of assembly, said that the proportionality test should be formulated in the following terms :

(i)       The restriction must be rationally connected with one or more of the legitimate purposes, and

(ii)      The means used to impair the right of peaceful assembly must be no more than is necessary to accomplish the legitimate purpose in question.

53.Bearing in mind the similarities between the provisions concerning the right of assembly and freedom of association, I shall later in this judgment employ the same two-stage test.

The right to privacy

54.As to what may broadly be called the right to privacy, art.30 of the Basic Law states that :

“The freedom and privacy of communication of Hong Kong residents shall be protected by law.  No department or individual may, on any grounds, infringe upon the freedom and privacy of communication of residents except that the relevant authorities may inspect communication in accordance with legal procedures to meet the needs of public security or of investigation into criminal offences.”

55.It will be seen that art.30 does not seek to protect privacy simpliciter.  It is more narrow in its scope.  Art.30 protects only the right of Hong Kong residents freely and in private to communicate with others whether by the spoken word, in writing or by telecommunication.  It includes therefore the right of persons who wish to associate together to attain a common goal to communicate with each other freely and in private.  To that extent, it may be said that the right to freely associate must include the right to communicate, the one right being an essential part of the other. 

56.Art.14 of the Bill of Rights, taken in exact terms from art.17 of the ICCPR, is drawn more widely.  It reads :

“(1)   No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

(2)   Everyone has the right to the protection of the law against such interference or attacks.”

57.‘Privacy’ is not the easiest concept to reduce to a legal definition.  It speaks, of course, of that part of every person’s life in which, without imposing on the rights and freedoms of others, personal autonomy may be expressed.  It is that secluded part of every person’s life in which, without outside interference, he or she may act independently.  Privacy, in its intimacy, is normally to be enjoyed in the seclusion of family, home and friends.  As a recognition of the independent nature of every individual, it is closely associated with the right to the protection of honour and reputation.  In an article published in ‘The International Bill of Rights’ (Columbia University Press, edited by Louis Henkin), Femando Volio described it as a kind of ‘spiritual zone’.

58.Art.8 of the European Convention, does not speak of ‘privacy’ but speaks instead of ‘private life’.  The two concepts, however, have been held to be indistinguishable.  In Niemietz v. Germany (1992) 16 EHRR 97, para.29, the European Court did not consider it necessary to attempt an exhaustive definition of the notion of ‘private life’.  But the Court did say that :

“However, it would be too restrictive to limit the notion to an ‘inner circle’ in which the individual may live his own personal life as he chooses and to exclude therefrom entirely the outside world not encompassed within that circle.  Respect for private life must also comprise to a certain degree the right to establish and develop relationships with other human beings.

There appears, furthermore, to be no reason of principle why this understanding of the notion of ‘private life’ should be taken to exclude activities of a professional or business nature since it is, after all, in the course of their working lives that the majority of people have a significant, if not the greatest, opportunity of developing relationships with the outside world.”

59.Privacy in plain terms may be described as every individual’s area of ‘private space’.  But, as such, of course, it has its limits.  In respect of the present case, this has two consequences.  First, it does not necessarily encompass every aspect of a person’s life that he might wish to keep private : see X. v. Iceland (1993) 16 EHRR 97, at para.29.  Second, respect for an individual’s privacy will be narrower when it is brought into contact with public life or is in conflict with other protected interests.  In this latter regard, in Bruggerman and Scheuten v. Federal Republic of Germany (1981) 3 EHRR 244, at paras.55 and 56, the European Commission said :

“The right to respect for private life is of such a scope as to secure to the individual a sphere within which he can freely pursue the development and fulfilment of his personality.  To this effect, he must also have the possibility of establishing relationships of various kinds, including sexual, with other persons.  In principle, therefore, whenever the State sets up rules for the behaviour of the individual within this sphere, it interferes with the respect for private life and such interference must be justified in the light of Article 8(2).

However, there are limits to the personal sphere.  While a large proportion of the law existing in a given State has some immediate or remote effect on the individual’s possibility of developing his personality by doing what he wants to do, not all of these can be considered to constitute an interference with private life in the sense of Article 8 of the Convention.  In fact, as the earlier jurisprudence of the Commission has already shown, the claim to respect for private life is automatically reduced to the extent that the individual himself brings his private life into contact with public life or into close connection with other protected interests.”  [my emphasis]

60.In my judgment, ‘public life’, as the term is contrasted with ‘private life’ in Bruggerman and Scheuten v. Federal Republic of Germany, must include life in the market place.  As I have said earlier, it is one of the marks of a modern democratic society that its commercial markets, especially its financial markets, are transparent.  In that sense transparency is the opposite to privacy.  Put simply, it must be axiomatic, I think, that if a person seeks to deal in the market place, he must expect that the rules governing his conduct – rules intended to secure fairness for all – will impinge on his right to privacy.  Doing business in the market place is not a private matter.  Rights of privacy, however, should only be extended to those areas of life in respect of which a person has a reasonable expectation of privacy.

61.Art.14 of the Bill of Rights recognises, of course, that the right to privacy is not absolute.  As with the right of freedom of association, it may be subject to limitations.  In this regard, art.14 provides that no one shall be subjected to ‘unlawful’ or ‘arbitrary’ interference with his privacy.

62.The term ‘unlawful’, as it appears in the article, means that there can be no interference unless envisaged by law.  In the present case, there is no dispute that the interference is envisaged by law.  That is set out in plain terms in ss.95 and 98 of the Companies Ordinance.

63.The term ‘arbitrary’ may extend to an interference which is envisaged by law but is nevertheless capricious; an interference, for example, that is found to amount to an abuse of power.

64.The use of the terms ‘unlawful’ and ‘arbitrary’ implies, as with the right of freedom of association, that, in cases such as the present one, a fair balance must be sought between the demands of the general interests of society and the requirements of the protection of an individual’s fundamental rights.  The machinery to be employed in achieving that balance is the proportionality test.

65.Again, I believe, I can use the same two-stage proportionality test, formulating it in respect of the right to privacy, in the following terms :

(i)        The restriction must be rationally connected with one or more of the legitimate purposes, and

(ii)       the means used to impair the right of privacy must be no more than is necessary to accomplish the legitimate purpose in question.

Is the applicant powerless to prevent inspection of its register?

66.A factor of considerable relevance to the test of proportionality is the extent to which the fundamental rights in question are restricted.

67.If the law provides measures by which the seriousness of a restriction may, in appropriate circumstances, be limited, that, it seems to me, is a matter of considerable relevance; indeed, perhaps determinative.

68.As I have understood it, however, it is integral to the applicant’s case that, in terms of s.98 of the Companies Ordinance, it has no power to prevent a member of the public inspecting its register of members even if the purpose of the inspection is so divorced from the purposes contemplated by the Ordinance as to amount to an abuse of the legal rights bestowed by that section.

69.In my judgment, however, the applicant is not left without any form of defence against demands to scrutinise its register which amount to an abuse.  On a true construction of s.98, I am satisfied that persons who demand access to the register do not have an absolute right to do so, their reasons for demanding access being irrelevant to the exercise of that right.  On a purposive construction of s.98, I am satisfied that it is not as supine as counsel for the applicant suggested.

70.S.98(1) of the Ordinance obliges a company to leave its register of members open for inspection both by members and third parties.  S.98(2) directs that, if required by members or third parties, the company must supply a copy of the register to any member or third party who seeks it.  A failure to comply with the obligations imposed under ss.98(1) and 98(2) attracts criminal liability.  Clearly, therefore, s.98 creates a legal right on the part of members and third parties to be able to inspect the register and to obtain a copy of it.  But s.98(4), in my judgment, on a true construction, reveals the legislative intention that the right should not be absolute.  I say that because s.98(4) gives to the courts a discretion whether or not to make an order compelling inspection or delivery up.  To cite it again, s.98(4) reads :

“In the case of any such refusal or default, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the persons requiring them.”  [my emphasis]

71.Read in context, the discretion to refuse an order under s.98(4) may be a narrow one but, in my judgment, the courts must be able to exercise that discretion, either by refusing to make an order or by making one in qualified terms.

72.That a discretion under s.98(4) does exist has been pronounced by the Court of Appeal in Pelling v. Families Need Fathers Ltd [2002] 2 All ER 440, a judgment concerning provisions under the English statute; namely, s.356 of the Companies Act 1985, which is to the same purpose and effect and almost identical in language to our s.98.  S.356 of the English statute obliges companies to keep their register of members open for inspection and, upon request, to supply copies of the register to any member or other person.  A failure to do so attracts criminal liability.  S.356(6), however, gives to the courts the same discretion as that provided by s.98(4) of our Ordinance; that is, the discretion to refuse to make any order compelling inspection or delivery up.  S.356(6) reads :

“In the case of such refusal or default, the court may by order compel an immediate inspection of the register and index, or direct that the copies required be sent to the persons requiring them.”

73.In giving the judgment of the Court of Appeal, Mummery LJ observed that the word ‘may’ appearing in the sub-section was normally to be read as conferring a discretionary power.  He recognised that there are certain situations where a discretionary power is conferred for the purpose of enforcing a right and is coupled with an obligation to exercise that power only for the benefit of the person who possesses that right.  But the word as it appeared in the sub-section, he said, was not to be construed in that manner.  In this regard, he adopted the reasoning contained in an Australian judgment, O’Brien v. Sporting Shooters Association of Australia (Victoria) [1999] 2 VR 255, at 255, where Byrne J rejected the submission that the court had no discretion under a similarly-worded provision in s.1303 of the Australian Corporations Law.  It was submitted to Byrne J that the word ‘may’ in that section was not permissive but merely signified that the jurisdiction of the court to make an order did not arise until there had been a contravention of the Law.  Byrne J (at 255) held that —

“the word ‘may’ means exactly that.  It means that the court is empowered to make the order where a refusal in contravention of the Law has been established, as in the present case.  Whether the power will be exercised must depend upon the proper discretionary considerations affecting the power in the light of the facts as are found by the court.”

74.As to the discretion conferred by s.356(6) of the English statute, Mummery J held that the courts will generally make a mandatory order to give effect to the legal right conferred by the statute to seek inspection of the register of members or to obtain copies of it.  But he went on to say that the legal right was not an unqualified one.  As he expressed it :

“There may be something special in the circumstances of the case which leads the court to refuse to make the usual order.”

75.In whatever manner, s.98(4) of the Ordinance may have been construed in the past, I am satisfied that, since the coming into effect of the Basic Law, a purposive construction, indeed, in so far as it necessary, a remedial construction, is appropriate.

76.S.2A(1) of the General Clauses Ordinance, Cap.1, directs that :

“All laws previously in force shall be construed with such modifications, adaptations, limitations and exceptions as may be necessary so as not to contravene the Basic Law …”

77.As to this court’s power, in so far as is necessary, to employ a remedial interpretation, the matter has been placed beyond doubt by the Court of Final Appeal in its judgment in HKSAR v. Lam Kwong Wai and Another [2006] 3 HKLRD 808 in which, Mason NPJ said the following (para.73) :

“In the context of the Basic Law, which arms the HKSAR with a modern constitution including entrenched rights and freedoms, the concept of judicial power necessarily includes the making of remedial interpretations in the sense already discussed.  It is recognized as an incident of the exercise of judicial power in other jurisdictions.”

78.I am therefore satisfied that, if a demand is made for an inspection of the register of members of a company or for receipt of a copy of it, for purposes which amount to an abuse, in the sense that I have earlier used the term, a court has the power under s.98(4) to refuse to compel compliance with the demand.

79.I am further satisfied that, if a court concludes that a demand amounts to an abuse, that will not only go to any civil liability under s.98(4) but also to any criminal liability under s.98(3).

80.In summary, therefore, I am satisfied that, in certain important circumstances, s.98 does give to the applicant the means by which it may limit the seriousness of any restriction that the section places on the freedom of its members to associate in private.

The issue of choice

81.During the course of submissions, there was considerable argument on what I will call the issue of choice.

82.Mr Yu, for the respondent, raised the issue in the following way.  In 1994, at the time when the decision was made to incorporate the Democratic Party, he said, the members of the political party had a number of choices open to them.  It was for them at the time to inform themselves as to the most appropriate choice or, if the choice subsequently proved to be wrong, to correct it.

83.Mr Yu pointed to the fact that at no material time has there been a statutory requirement for political parties to be incorporated or registered in any way.  Nor is there legislation regulating the operation of political parties.

84.In this regard, I am told that the matter has been debated in the Legislative Assembly with opinions divided.  The Administration has concluded that, at this moment in Hong Kong’s history, the introduction of statutory controls may do more to hinder rather than facilitate the development of political parties.

85.Mr Yu accepted that incorporation presented a number of administrative and economic advantages.  But he emphasised that there were other routes.  The members of the party could, for example, have registered the party as a society under the Societies Ordinance, Cap.151.  The evidence showed that several associations of a political nature had chosen this route.  No doubt registration under the Societies Ordinance has disadvantages, he said, but equally no doubt it has advantages too.  There would, for example, be no need to leave a register of members open to public scrutiny.

86.Mr Yu went on to say that, even with incorporation, the members of the Democratic Party had open to them a number of alternatives as to how best to arrange matters so as to protect the anonymity of those, especially rank and file members, who did not wish the world to know of their affiliation.  He set out a number of possibilities.  It is, I think, sufficient to briefly map out two :

(1)     There was no need, he said, for all members of the political party to be members of the corporate body.  For example, founding members and office holders could constitute the membership.  Rank and file members could be gathered under a separate scheme whereby they were members of the party, not the company.

(2)     The Democratic Party, he said, could establish a company limited by share capital, and have each member own a share.  When a member wants to remain ‘off the register’, the share may be held by a nominee.  Indeed the Democratic Party could formally allocate a particular officer to hold shares on trust for those members who wish to remain ‘off the register’.  This would not affect members’ voting rights.

87.These choices, said Mr Yu, would have ensured that the freedom of the applicant’s members, certainly its rank and file members, to associate in private was not impinged.  The applicant, however, had chosen the one way in which it was impinged.  In such circumstances, having made its choice, the applicant had to accept the consequences of that choice.

88.Mr Shum did not contest that there had been, and remained, certain alternatives open to the applicant; effective and lawful alternatives, even if perhaps more cumbersome.  Mr Shum, however, rejected the contention that, having made its choice, the applicant could not now be heard to complain.  The right to freely associate in private, he said, was a right in a democratic society to do so in each and every way that the law provides.  As it is, the law provides that the applicant may incorporate in the manner it has done.  As such, having made that choice, the applicant was not obliged as a consequence to endure the diminishment of the fundamental freedoms of its members.

89.Mr Shum agreed that, if the choices open to the applicant all provided equal benefits, then there may be some validity in Mr Yu’s submission.  But, when each choice was problematic, each having advantages and drawbacks, then the ‘you made your bed, you must lie on it’ contention lost its validity.  The applicant, said Mr Shum, was entitled to order its affairs as it saw best.

90.In my judgment, while there can be no hard and fast rule, if the state permits a choice, even if they do not all provide the exact same advantages, that must be a relevant factor in deciding whether there is a reasonable relationship of proportionality between the limitations that the state imposes; in this case, the obligations imposed by s.98, and the legitimate objectives that the limitations seek to attain.

91.In coming to this conclusion, I start from the fundamental approach that matters concerning human rights demand a sensible determination.  If, as Lord Woolf said in Attorney General of Hong Kong v. Lee Kwong Kut [1993] AC 951 PC, at 975, issues concerning a Bill of Rights should be approached ‘with realism and good sense, and kept in proportion’, it seems to me that, whether or not the state leaves open other viable options, must be a matter that can assist the court in determining whether there has been a violation of a protected right.

92.Although it was not cited in the course of submissions, I note that the European Court of Human Rights, in Le Compte, Van Leuven and De Meyere v. Belgium (1981) 4 EHRR 1, in considering art.11 of the Convention which protects freedom of association, took the factor of viable alternatives into account.  The Court held that an obligation to join the Ordre de Medecins in order to practice medicine did not violate art.11 because doctors were free to form their own associations even though they were also compelled to join the Ordre.   The Court noted (para.65) that :

“However, there is a further requirement: if there is not to be a violation, the setting up of the Ordre by the Belgian State must not prevent practitioners from forming together or joining professional associations.  Totalitarian régimes have resorted – and resort – to the compulsory regimentation of the professions by means of closed and exclusive organisations taking the place of the professional associations and the traditional trade unions.  The authors of the Convention intended to prevent such abuses.

… in Belgium there are several associations formed to protect the professional interests of medical practitioners and which they are completely free to join or not.  In these circumstances, the existence of the Ordre and its attendant consequence – that is to say, the obligation on practitioners to be entered on the register of the Ordre and to be subject to the authority of its organs – clearly have neither the object nor the effect of limiting, even less suppressing, the right guaranteed by Article 11 …”

93.The factual circumstances are, of course, different to the present case.  No doubt the decision of the European Court can be distinguished on a number of grounds.  I have cited it for one reason only.  In my view, it confirms that the availability of viable alternatives is a relevant factor to take into account.

Legislative provisions in other jurisdictions

94.During the course of submissions, Mr Shum, for the applicant, laid emphasis on the fact that, in a number of other common law jurisdictions, legislation reflecting the provisions of our ss.95 and 98 are more nuanced, making provision for the protection of members who are made the subject of improper applications.  But the issue before this court is not whether there are more nuanced statutory regimes in other jurisdictions but whether the regime presently constituted under our Ordinance is inconsistent with the protected freedoms of members of political parties when those parties have incorporated and made the choice to make all members of the party members also of the corporate body.

95.The English Companies Act 2006, places the burden on a person seeking inspection to justify the request.  However, as I have found earlier, s.98(4) of the Hong Kong Ordinance, while no doubt it places the burden on a company to justify a denial of inspection, nevertheless does provide a protection against claims that constitute an abuse.

96.I would add that the wide sweep of the statutory regime created by ss.95 and 98 of the Ordinance is not, by that reason alone, to be taken as being inconsistent with the fundamental freedoms advocated by the applicant on behalf of its members.  Bright line rules which are easy to apply and ensure fairness in the great majority of cases may be permissible even if some hardship is demonstrated in individual cases.  In James v. United Kingdom (1986) 8 EHRR 123, when considering expropriation legislation, the European Court observed that (para.68) —

“… legislation of wide sweep, in particular if it implements a programme of social and economic reform, is hardly capable of doing entire justice in the diverse circumstances of the very large number of different individuals concerned.”

Looking to the authority of National Association for the Advancement of Coloured People v. Alabama

97.During the course of submissions, Mr Shum placed considerable emphasis on the judgment of the Supreme Court of the United States in the case of National Association for the Advancement of Coloured People v. Alabama.  While I have obtained much assistance from that judgment as to the integration and relative importance of the two freedoms of freedom of association and what, in broad terms, I have called the right to privacy, in my view, it has rendered limited assistance in respect of other matters essential to this judgment.  I say that because the factual context in which the Supreme Court came to its judgment is very different from the factual context in the present case.

Employing the proportionality test

98.It is accepted that the restrictions imposed by s.98 on the applicant (and, through the applicant, its members) are prescribed by law.

99.It must equally be accepted, I believe, that the restrictions imposed by s.98 seek to achieve a legitimate purpose.  I have explained that purpose at some length earlier in this judgment.  That there is a rational connection between the restrictions imposed by s.98 and the legitimate purpose that the section seeks to achieve must also be accepted.

100.Members of a company, it seems to me, have a legitimate interest, in the great majority of cases, in knowing who are the other members.  Members are entitled to know who they stand in association with.  Inter-action between members is an essential part of the operation of a company.  Equally, it seems to me that, in the great majority of cases, third parties have a legitimate interest in knowing who stands behind a company.

101.In respect of a political party (such as the applicant), it seems to me that the fundamental rationale must still apply.  Persons dealing with an incorporated political party – whether, for example, to make a donation to it or enter into some commercial relationship with it – if they are to be able to place trust in the party, are entitled to learn who stands behind it.

102.The real issue, it seems to me, is whether it can be said that the restrictions imposed by s.98, in so far as they apply to incorporated political parties, are no more than is necessary.

103.In this regard, in setting out the various factors earlier in this judgment which I believe must go to determine the issue, and in explaining their dynamics in detail, I have been drawn to the conclusion that, to protect the rights and freedoms of others, the restrictions imposed by s.98, insofar as they may affect political parties that have chosen to incorporate, are no more than is necessary.

104.In my judgment, the difficulty faced by the applicant may be stated in the following terms :

(i)      Those persons who chose to incorporate the Democratic Party, and who chose to make all members of the party members of the corporate body, and continue to abide by that decision, chose thereby to bring each and every member into substantial contact with matters public; in many ways, into potential conflict with the rights and freedoms of others.  By making that choice, they chose to limit the seriousness of any restrictions placed on the freedom of members to associate in private.

(ii)      I say this because it is to be remembered that the applicant has extensive powers under its memorandum of association to deal commercially; that is, to borrow money, to enter into contracts and the like.  It has the power, as I have said, to accept donations.  On top of that, it has the power to undertake associated activities such as to campaign to raise funds.  In that regard, it can have no real complaint that, like all other companies which operate under the Ordinance, people dealing with it should be entitled to know who stands behind it.

(iii)     What must be emphasised is that the persons who made the decisions to incorporate and to make every member of the political party a member of the corporate body were not under an obligation in law to do so.  Put simply, they could have chosen a number of viable alternatives.  Even if, having chosen incorporation, they wished to protect the identity of members, there were still options open to them to achieve this end. 

(iv)     The applicant’s real complaint, as I have understood it, is that persons may seek, and have sought, access to the register of members for reasons which fall outside the parameters of matters contemplated by the Ordinance or which fall reasonably into its ambit.  But, if that is the case, as I have said earlier, the applicant is not left entirely powerless.  S.98(4) of the Ordinance does provide a shield against what I have described as abusive applications. 

(v)     In summary, the applicant and its members are able to enjoy the advantages that incorporation gives and, at the same time, are provided with a measure at least of protection by the statutory regime against demands which improperly, in terms of the Ordinance, invade their freedom to associate in private.

105.On that basis, it seems to me that the provisions of the Companies Ordinance do strike a fair balance between the demands of the legitimate interests of Hong Kong society, particularly in the commercial and financial sphere, and the requirement of the protection of the individual freedoms of the applicant’s members.

106.It is accepted that s.98 may not provide the clear cut protections contained in the United Kingdom’s Companies Act 2006.  No doubt, there are strong arguments for saying that the statutory regime contained in our Ordinance can be improved.  But that, as I have said, is not the issue.  The issue is whether the regime, as presently constituted, is inconsistent with the fundamental freedoms of the applicant’s members to associate in private.  I do not find it to be so.

107.It is also to be remembered that bright line rules which are easy to apply and ensure fairness in the great majority of cases may, when fundamental freedoms are being considered, still be permissible if they ensure fairness in the great majority of cases and are to that extent justified in the general interests of society even if they impose a restriction on those freedoms.

Conclusions

108.For the reasons given in the body of this judgment, I am not prepared to make the declaration that has been sought. 

109.I see no reason why costs should not follow the event and I make an order nisi to that effect.  The order will be made final in 14 days from the date of this judgment unless an application is made within that time to set the matter down for argument.

Mr Erik Shum and Ms Linda Wong, instructed by Messrs Ho, Tse, Wai & Partners, for the Applicant

Mr Benjamin Yu, SC and Ms Yvonne Cheng, instructed by Department of Justice, for the Respondent