United Muslim Association of Hong Kong and Others v. Yusuf Yu and Others

HCA 640/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 640 OF 2012

BETWEEN

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DECISION ON COSTS

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I.   INTRODUCTION

1.The 1^st plaintiff (“UMAH”) was founded as a registered society in 1992 by Mohamed Alli Din (“Alli Din”), and was incorporated in 1997.  It is a tax exempt charitable institution that safeguards/promotes the religion, education, welfare and interests of Muslims in Hong Kong.  Alli Din was the chairman of the UMAH, and was in charge of the day‑to‑day operation of the UMAH until his death on 4 December 2009.

2.Alli Din was known for his philanthropic work for ethnic minorities in the New Territories.  He helped to establish the Haji Omar Sadick Care and Attention Home (“Aged Home”) and the UMAH International Primary School, both of which were operated by the UMAH.

3.Alli Din’s lifelong dream was to build a mosque in the New Territories.  In 2006, he secured a sponsorship of HK$9 million by the Qatar Trust for acquiring Sheung Shui Town Lot No 203 (“Land”) from the government for building a mosque and a residential care home (“Project”).

4.By New Grant No 20193 dated 31 March 2006 (“Grant”), the government granted the Land to the UMAH for a premium of HK$9,350,000.00.  Under the Special Conditions, UMAH had to erect and maintain upon the Land inter alia a mosque and a non‑profit‑making residential care home, which shall commence to operate on/before 30 March 2011, failing which the government may re-enter upon and take back possession of the Land or any part thereof.

5.On 30 September 2009, a memorandum of agreement was signed between the Ministry of Finance of the Saudi Arabian government (“SAMF”) and the UMAH whereby the SAMF agreed to fund the Project on the terms specified therein and eventually to run the mosque jointly with the UMAH.

6.But after Alli Din passed away, the Project languished.  As at the hearing before me on 10 May 2013 (“Hearing”), the Land remained undeveloped.  Two premium payments of HK$104,500.00 and HK$117,600.00 respectively had already been made to the government to forestall re‑entry upon the Land.  On 30 March 2012, the District Lands Office (“DLO”) noted the UMAH’s breach of the “Commence to Operate” covenant, and offered not to enforce the government’s rights under the Grant conditional upon (a) payment of a premium of HK$229,100.00, and (b) award of a building contract in respect of the Land on/before 30 September 2012 supported by a current Building Authority’s consent to commence works (Form 14) and an undertaking to commence work on site before a set date to be specified in the building contract (“Building Contract”).

7.Since January 2010 (ie shortly after Alli Din passed away) dispute arose over the membership and the management of the UMAH between opposing camps, ie the 2^nd to 7^th plaintiffs (“P2, P3, P4, P5, P6 and P7” or collectively, “Ps”) and their supporters, and the 1^st to 3^rd defendants (“D1, D2 and D3” or collectively, “Ds”) and their supporters.  In a nutshell, the Ps claim the Ds were/are not members of the UMAH or its Council of Management (“Council”), such that their representing and holding out to be such members and their convening of annual general meetings (“AGMs”) of the UMAH and meetings of the Council were contrary to the articles of association of the UMAH (“Articles”) and unlawful.  The Ds made vice versa complaints against the Ps.

8.For present purposes, it is not necessary for me to set out in any detail the parties’ many complaints except to give a broad outline of the allegations as gleaned from the affirmations and pleadings to enable understanding of the injunctions and undertakings granted/given in the present action. The omission of any contention or details thereof in the discussion below does not mean they are not in dispute.

II.   UNDISPUTED MATTERS

9.Before I set out the gist of the differences between the parties, it will be convenient to state some common ground between them which are pertinent to the present matter before me.

10.First, the UMAH has a bank account with the Standard Chartered Bank (“SCB”). Alli Din was an authorised signatory of such bank account before he passed away, and D2 (Alli Din’s 2^nd wife/widow) was also a signatory.

11.Secondly, the Ps through P3 and the Ds through Rashida Wong née Din tried to register notifications of directors and company secretary of the UMAH with the Companies Registry.  But due to the confusion caused by the disagreements referred to in paragraph 7 above, the Companies Registry would not process the notifications, which caused problems concerning the operation of the UMAH’s bank accounts, and which in turn had implications on the finances and operation of the Aged Home.  For the avoidance of doubt, there is dispute between the parties over the validity of the alleged appointments of directors and company secretary set out in the notifications to the Companies Registry by P3 and Rashida Din.

III.     PLAINTIFFS’ CASE

12.The Ps claim they have been members of the UMAH since 1996 to 2010.  Due to Alli Din’s illness, no AGM was held in 2009.  The Ps claim that in January 2010, Alli Din’s son Mohamed Ayub Din (“Ayub Din”) issued a notice (with newspaper advertisement) to call for an AGM of the UMAH to be held on 7 February 2010.  The Ps claim that the notice dated 15 January 2010 satisfied the requirements of the Articles.  At such AGM, the Council members were elected with Ayub Din as the chairman, but he later resigned and was replaced by Sa Lee Man and later by Ayesha Din (Ayub Din’s wife).  P3 and P6 were appointed as Council members.  P2 was co‑opted as a Council member in 2011.

13.In light of the problems with the Companies Registry, P2 and P3 prepared a membership list from the existing records.  They discovered there were 64 current paid up members.  By resolution of the Council and support of 12 UMAH members, a decision was made to call and convene an AGM.  A notice dated 24 February 2012 was sent to members of the UMAH.  It was advertised in a newspaper on 2 March 2012.  The Ps claim that at the AGM on 25 March 2012 attended by 52 members, they were validly elected as members of the Council for 2012.

14.At the Council meeting held shortly thereafter, P2, P3 and P4 were respectively appointed as the chairman, secretary and treasurer.  But the Council members could not properly update the membership list due to interference by the Ds who claimed themselves to be Council members.

15.On/about 21 March 2012, the Ds published (a) a notice to members of the UMAH and to the residents/staff/visitors of the Aged Home (by posting up the notice thereat) calling for an alleged AGM to be held on 22 April 2012 (“Notice”), and (b) a letter to P3 (which was copied to the Companies Registry) claiming they were Council members (“Letter”).  The Ps claim that the contents of the Notice and the Letter were defamatory.  A notice for the alleged AGM was also published in an Urdu newspaper.

16.The alleged AGM held on 22 April 2012 was invalid since it was not (a) a meeting of the UMAH convened by the Council, (b) attended by members of the UMAH, and/or (c) held pursuant to a valid notice given to members of the UMAH that complied with the requirements in the Articles.

17.The Ps complain that D1 never applied to be and was not a member of the UMAH at all, and he only became involved in the affairs of the UMAH since January 2010.  They claim that D2 did not live with or care for Alli Din in his declining years, and was not active in the affairs of the UMAH.  Her membership had been terminated because she failed to pay her membership fees.  In respect of D3, the membership records kept by Alli Din did not reveal D3’s name.  But even if he were a member of the UMAH, his membership had been terminated because he failed to pay his membership fees.

18.The Ps also claim that the meetings of the purported Council which comprised the Ds and the purported meetings of the UMAH convened by the Ds or by their purported Council, and the resolutions passed at such purported meetings were invalid and unlawful on the basis of inter alia invalid notice, insufficient quorum, etc.

19.The Ps sought inter alia (a) declarations that the Ds were not members of the UMAH or the Council and that they did not represent the UMAH, (b) an injunction to restrain the Ds from (i) calling or participating in meetings of the UMAH or (ii) holding themselves out as members of the UMAH or the Council, and (c) damages to be assessed.

IV.     DEFENDANTS’ CASE

20.The Ds claim they were/are members of the UMAH and the Council.  D1 was a close friend of Jamillah Hertz née Din (Alli Din’s daughter).  He had assisted Alli Din with fund‑raising, and became involved in the affairs of the UMAH after he was admitted as a member and elected as a Council member.  D2 was a member of the UMAH since 1992 and participated actively in the UMAH.  Alli Din paid her subscription fees before his death, and thereafter she herself paid all her membership fees.  D3 was a member of the UMAH since 1996 and a Council member since 2006.

21.In 2008, there were 12 Council members.  After Alli Din died, the 11 surviving Council members, including Rashida Din (honorary secretary), Ayub Din, Mohamed Islam Latif (son of Alli Din), Mohamed Ramzan Din (son of Alli Din), D2 (honorary treasurer) and Jamillah Din, were entitled to hold office.  The Council for 2008 continued in 2009 and 2010.  But some Council members were out of Hong Kong and rarely participated in the affairs of the UMAH, so it was difficult for the remaining 7 active Council members to manage the UMAH given the quorum requirement for Council meetings.

22.Indeed, the Council meetings held on 16 and 20 January 2010 were adjourned due to lack of quorum.  But at the Council meeting on 23 January 2010, there was sufficient quorum with 7 Council members present even though Ayub Din arrived late.  Although Ayub Din was upset about the meeting, valid resolutions were passed to admit D1 as a member of the UMAH and as a Council member to fill a vacancy.

23.At another Council meeting on 7 February 2010, the UMAH membership list showed there were 109 members (ie the Ds disputed the membership list compiled by the Ps).  At such Council meeting, it was resolved to call for an extraordinary general meeting (“EGM”), which was in effect an AGM, to be held on 28 February 2010 to elect a new Council.  Notice was issued on 7 February 2010 for such purpose.  The Ds claim that the EGM held on 28 February 2010 was in accordance with the Articles and had the necessary quorum.  The Ds (who had paid their membership fees and were still members of the UMAH) were elected as Council members, and Rashida Din was appointed as company secretary of the UMAH.

24.Members of the Din family including D2 signed the Notice.  Although the Notice was published by a Din family member, the Ds agree with its contents which they say were not defamatory.  The Ds also claim that the Letter was not defamatory, that P3 well knew he was not a member of the UMAH, and that P3 also knew Rashida Din had re‑registered herself as the company secretary of the UMAH.

25.The Ds say the Ps started to claim themselves as members of the UMAH and the Council since 7 February 2010, but they had never applied to become members of the UMAH, and hence were not eligible to become Council members.  P2 was considered to be rebellious by Alli Din, who did not accept him as member of the UMAH during his lifetime.  P3’s employment with the UMAH was terminated due to unsatisfactory performance.  As for P4 to P7, apart from having seen P4 for a few months, the Ds had never seen the others.

26.The Ds also claim that the purported Council meetings and the purported meetings of the UMAH convened by the Ps, and the resolutions passed at such purported meetings were invalid and unlawful in that such meetings were not convened with the approval of the Council of 2008, and the Ps were not members of the UMAH.  The Ds by counterclaim seek (a) declarations to such effect, (b) injunctions to restrain the Ps from holding themselves out as members of the UMAH or the Council, and from interfering with the affairs of the UMAH, and (c) damages.

V.      PROCEEDINGS

27.On 20 April 2012, the Ps commenced the present action.  On the following day, on the strength of two affirmations by P2 eventually filed on 23 April 2012, the Ps obtained an ex parte injunction against the Ds (“Ex Parte Order”) restraining them from:

(a)   calling, holding, convening, organising, assisting with or participating in by any means whatsoever any meeting purporting to be an AGM or any other type of meeting of the UMAH whether to be held on 22 April 2012 or at any other date/time thereafter;

(b)   representing or purporting to hold themselves out to the public or any person or third party to be the UMAH, the Council or the members thereof or in any way whatsoever to represent the UMAH whether by written or electronic publication, orally or in any other way whatsoever.

28.On 26 April 2012, the UMAH and the Ps issued an inter partes summons for the continuation of the Ex Parte Order (“Ps’ Summons”).  On 27 April 2012, DHCJ L Chan (as he then was) ordered the injunction to be varied as follows and to continue in force until trial or further order (“Varied Order”):

(a)   that the Ds and each of them by themselves, their servants or agents or otherwise be restrained from (as against D1) convening or assisting in the convening of or participating in by any means whatsoever any AGM, EGM or meeting of the Council, and (as against D2 and D3) convening or assisting in the convening of or participating in any meeting purporting to be an AGM or EGM or meeting of the Council contrary to UMAH’s memorandum and articles of association;

(b)   that the Ds and each of them by themselves, their servants or agents or otherwise be restrained from (as against D1) representing or purporting to hold out to any person to be a member of the UMAH or the Council or in any way to represent the UMAH, and (as against D2 and D3) representing or purporting to hold out to any person to be a member of the Council or in any way to represent the UMAH by any means.

The learned judge also adjourned Ps’ Summons for argument, and gave directions for filing and serving affidavit evidence.

29.On 11 May 2012, the Ds filed the affirmations of D1, D2, D3, Ayub Din, Khan Mohd Amir, and Waheed in opposition.  On 1 June 2012, the Ds applied by inter partes summons (“Ds’ Summons”) for an order that:

(a)   the Ps and each of them, by themselves, their servants or agents or otherwise be restrained until after judgment or further order from convening, assisting in the convening of or participating in any meeting purporting to be an AGM, EGM or meeting of the Council contrary to UMAH’s memorandum and articles of association;

(b)   representing or purporting to hold out to any person to be a member of the UMAH or the Council or in any way to represent the UMAH by any means.

30.On 12 September 2012, Ayub Din filed his own affirmation to clarify his stance in this matter.  On 13 September 2012, the Ps filed P2’s 3^rd affirmation in support of the Ps’ Summons.  On the same day, Mimmie Chan J dismissed Ds’ Summons and continued the Varied Order until trial or further order (“Continued Order”) upon undertakings given to the court by the Ps (“Undertakings”) to procure:

(a)   the formation of a committee of the UMAH to deal with on behalf of the UMAH all matters concerning the Project (“Committee”), subject to the approval of the Council of which P2 to P7 were members as at the date thereof;

(b)   the membership of the Committee was to comprise 7 persons, ie Amjad Niaz, the Ds and P2 to P4, subject to the approval of the Council;

(c)   the resignation of three Council members and the appointment of the Ds as new Council members in their place, subject to the approval of the Council;

(d)   the funds for payment of the next instalment of HK$229,100.00 of the premium payable to the government in relation to the Land planned for construction of the mosque under the Project (“Premium Undertaking”).

31.On the same day, Mimmie Chan J also gave directions for pleadings, discovery and witness statements, and she further directed that the present action be set down for trial within 35 days of the exchange of witness statements.  Between 12 October 2012 and 9 January 2013, the parties filed their respective pleadings.

32.On 30 April 2012, the Ds issued an inter partes summons for (a) an order that unless the Ps comply with the Undertakings on or before 3 May 2012, the Varied Order against the Ds be discharged forthwith, and (b) costs of such summons to be paid by the Ps jointly and severally on indemnity basis (“Discharge Summons”).

33.The Ds filed the 2^nd and 3^rd affirmations of D1 on 2 and 7 May 2013 respectively and the affirmation of Rashida Din on 9 May 2013 in support of the Discharge Summons.  The Ps filed the 4^th and 5^th affirmations of P2 on 7 and 10 May 2013 respectively in opposition.

34.At the Hearing on 10 May 2013, the parties were able to reach accommodation on the disposal of the Discharge Summons save and except for the question of costs.  I therefore ordered that upon the undertakings given by the Ps to the court as set out in the paragraph below the Continued Order be further continued until trial or further order save that the Ds and/or each of them shall be at liberty to:

(a)   attend and participate in all meetings of the Committee, the membership of which was to comprise Mohammad Hanif, P2 to P4 and the Ds;

(b)   represent and hold themselves out to any person or third party to be members of the Council upon their appointment as members thereof until their resignation or retirement;

(c)   attend and participate in all meetings of the Council of which they are members until their resignation or retirement.

35.At the Hearing, the Ps through their counsel Mr Lo gave undertakings to the court to procure (a) a meeting of the Council to be held on or before 13 May 2013, (b) Shakeel Oaimkhaui, Jamil Kanwal and Oaisar Onyyum being then members of the Council to tender their resignations at such meeting, (c) the Council to accept such resignations at such meeting, and (d) the Council to appoint the Ds as members of the Council to fill the vacancies left by such resignations at such meeting.

36.On the same day, I made unless orders against the parties on discovery and witness statements, and granted leave to the Ps to set the present action down for (a) speedy trial in the fixture list before a judge without a jury with 4 days reserved and (b) Pre‑trial Review to be heard not later than 6 weeks before trial.

37.This is the decision on the disputed matter of costs in respect of the Discharge Summons.  Mr Chung, counsel for the Ds, submits that the Ps should pay the Ds half of the costs of the Discharge Summons with the remaining half of the costs to be in the cause on the basis that the Discharge Summons was necessitated by the Ps’ non‑fulfilment of the Premium Undertaking and that the Ds have succeeded in varying but not fully discharging the Continued Order.  On the other hand, Mr Lo submits that the appropriate order should be for costs of the Discharge Summons to be costs in the cause.  Both Mr Chung and Mr Lo submit that if the court does not favour either of their primary propositions on costs, then costs of the Discharge Summons should be defendant’s costs in the cause for half of such costs, and costs in the cause for the remaining half of such costs.

VI.     DISCUSSION

38.It is necessary to first put the Discharge Summons in context.  According to the letter from the DLO to the UMAH dated 30 March 2012 (see paragraph 6 above), the then extended deadline for compliance with the “Commence to Operate” covenant in the Special Conditions of the Grant fell on 31 March 2012.  It is evident from the two prior premium payments that such deadline had already been extended twice.

39.According to such letter from the DLO as exhibited to P2’s 1^st affirmation in support of the application for the Ex Parte Order, the third premium (“3^rd Premium”) to further extend the deadline for complying with the “Commence to Operate” covenant in the sum of HK$229,100.00 would be due on/before 30 September 2012.  In his first affirmation, P2 asserts that the Ps “are ready to pay the third [ie the 3^rd Premium] in April 2012”, but as a stop‑gap measure, the Ps had agreed with the Ds to act through the directors that each camp had tried to register with the Companies Registry “in order to satisfy the government, and pay the premium”.  P2 also claims that the Ds and their group “for the first time (following our Solicitors letter of 29^th March 2012 …) found donors willing to contribute funds for this purpose to pay the third premium of HK$229,100”.  However, despite P2’s assertion that the Ps were ready to pay the 3^rd Premium in April 2012, it was not so paid on or before the deadline of 30 September 2012 that was extended pursuant to the letter from the DLO dated 30 March 2012.

40.Therefore, when on 13 September 2012 the Ps gave the Premium Undertaking to pay the “next instalment” of the premium (ie the 3^rd Premium) in the sum of HK$229,100.00 in relation to the Land, the due date for such payment fell on 30 September 2012.  

41.But the letter from the DLO to the UMAH dated 28 September 2012 revealed that an application for further extension of the “Commence to Operate” covenant was made right after the Ps gave the Premium Undertaking, ie on 18 and 21 September 2012.

42.In respect of the Continued Order and the Undertakings granted/given at the hearing on 13 September 2012, a number of matters are of note:

(a)   The Continued Order was granted on the basis of the Undertakings given by the Ps to the court.  Indeed, Mimmie Chan J in paragraph 3 of her Decision dated 13 September 2012 stated that “[in] view of the undertakings offered by the plaintiffs this morning, I will continue the interim injunction until trial or further order …”

(b)   The Ps must have been aware all along (including at the time when they gave the Undertakings to the court) that the Ds adopted and maintained a stance diametrically different from theirs as to (i) the validity or otherwise of various UMAH and Council meetings called or convened by the Ps’ camp or the Ds’ camp, and (ii) the legitimacy or otherwise of the Ps’ and the Ds’ membership of the UMAH and the Council, and that these disputed matters cannot be resolved until trial.

(c)   Until these disputes are resolved at trial, the Ds are not debarred from maintaining their stance over such disputes except that under the Ex Parte, Varied and Continued Orders they cannot continue to represent or hold themselves out to others to be members of the UMAH or the Council or in any way represent the UMAH.  But there is no obligation on the part of the Ds at this interlocutory stage when the merits have yet to be determined to abandon their stance, and short of any representation and holding out by the Ds to others after the injunction was imposed the mere fact that donors or potential donors to the UMAH are aware of the disagreements between the Ps and the Ds is not a fault that can be laid at the Ds’ door insofar as the Undertakings and compliance thereof are concerned.

43.As explained in paragraph 39 above, the Ps did not pay the 3^rd Premium by 30 September 2012 or at all notwithstanding P2’s assurance in April 2012 and the Premium Undertaking.  The DLO by their letter dated 28 September 2012 informed the UMAH of their breach of the “Commence to Operate” covenant, but offered not to enforce the government’s rights under the Grant conditional upon (a) payment of a premium of HK$265,300.00 by 11 October 2012, and (b) award of the Building Contract.  Again, notwithstanding P2’s assurance in April 2012 (see paragraph 39 above) and the Premium Undertaking, 11 October 2012 came and went, and still the Ps did not pay the 3^rd Premium.

44.The non‑fulfilment of the Premium Undertaking came to light because just a few weeks before the Ds issued the Discharge Summons when the Ds heard about such non‑payment of the 3^rd Premium.  Enquiries by the Ds revealed that by a letter dated 25 April 2013 (ie 5 days before the Discharge Summons was issued) the DLO required the UMAH to pay the 3^rd Premium in the sum of HK$276,099.00 by 9 May 2013 for an extension of the “Commence to Operate” covenant to 31 March 2013.  By this time, the deadline for paying the 3^rd Premium has been extended from 30 September 2012 to 11 October 2012 and then to 9 May 2013.  But even up to the time of the issuance of the Discharge Summons on 30 April 2013 and the initial hearing of such summons before Mimmie Chan J on 3 May 2013, the Ps still have not paid the 3^rd Premium notwithstanding P2’s assurance in April 2012 (see paragraph 39 above) and the Premium Undertaking.  Indeed, at the initial hearing of the Discharge Summons on 3 May 2013, the Ps sought an adjournment for more time to pay the 3^rd Premium and to file affirmation evidence.  However, Mimmie Chan J was only prepared to adjourn the Discharge Summons to 10 May 2013 before the Summons Judge.

45.I pause here to note that all along the Ds claim they had not been told about the non‑payment of the 3^rd Premium.  Mr Chung says that this is a matter of concern because delay in payment of the 3^rd Premium would attract sanction as evident from the increase in the amount of the 3^rd Premium as the deadline for payment was extended from time to time.  Indeed, there is nothing in the affirmation evidence before me to show that at least up to the time of the Discharge Summons the Ps had alerted the Ds about the non‑fulfilment of the Premium Undertaking.

46.Mr Lo’s answer to this is that the Ds had been interfering with mail sent to the UMAH.  According to P2’s 5^th affirmation, the Ds were able to intercept letters addressed to the UMAH because its office at Yau Oi Estate was blocked by chains, which the Ps suspected were placed by the Ds (but which the Ps also acknowledge that the Ds denied).  P2 goes on to say that mail addressed to the UMAH would be left at the Aged Home also located at Yau Oi Estate, and he verily believes that D2 (who lived in the same building and who could gain access to the Aged Home) “could and did interfere with mail addressed to [the UMAH]”.  P2 also says they had made a report to the police for attempted assault and harassment by the Ds.

47.If the above is a suggestion that the Ps have not received DLO’s letters advising of the time extensions for payment of the 3^rd Premium and of the increase in the amount to be paid, I am unable to understand how this is any or any sufficient answer to the Ds’ stance that they had been kept in the dark about the non‑payment of the 3^rd Premium all along.  P2’s above assertions are speculative bare assertions.  Even if the Ds could interfere with mail sent to the UMAH’s office, it is no basis for saying they did.  Moreover, the DLO’s letter dated 28 September 2012 was sent to the UMAH’s mailbox and not to its office, and the DLO’s letter dated 25 April 2013 showed that the UMAH had sent replies to the DLO on 12 October and 7 December 2012.  But more importantly, it is the Ps and not the Ds who gave the Premium Undertaking to the court, and they must have known that they had not paid the 3^rd Premium.  The burden is on them and not on the Ds to make enquiries with the DLO.  There is no merit to this argument.

48.In P2’s 5^th affirmation filed on 10 May 2013 (ie the very day of the Hearing), the Ps disclosed that the Incorporated Board of Trustees of Islamic Community Fund of Hong Kong (“BoT”) was acting as middleman between the Ps and the Ds (see the letter from the BoT to the Home Affairs Department dated 8 March 2013), and that it was eventually agreed the BoT would be responsible for the premium payable to the government until the completion of the Project and the BoT would hand over the Project to the legitimate body in the name of the UMAH.

49.P2’s 5^th affirmation also revealed that P2 in the name of the UMAH had written to the DLO on 7 May 2013 to seek indulgence to pay the 3^rd Premium by instalments.  Such letter claims they had raised HK$100,000.00 to pay the initial payment and urged that they be allowed to make 2‑3 instalment payments and possibly in one go if the UMAH’s bank account could be activated.

50.On the same day, P2 claiming to be the chairman of the UMAH wrote to the BoT to request for a loan of HK$276,099.90 on behalf of the UMAH to pay the 3^rd Premium that was due to paid on 9 May 2013, and undertook to repay the same upon activation of the UMAH bank accounts.

51.In my view, these letters demonstrate that despite the P2’s assurance that the Ps were ready to pay the 3^rd Premium in April 2012 (see paragraph 39 above), the Premium Undertaking, and the three extensions of time to pay the 3^rd Premium granted by the DLO, the Ps were actually not ready to pay the 3^rd Premium even two days before the latest deadline.  Relief only came when the Ps were able to secure the loan from the BoT on 7 May 2013, and P2 advised D1 of such fact by email on the same day.

52.On 8 May 2013, P2 wrote to the BoT to express gratitude for the loan and surprise at D1’s wish still to pay the 3^rd Premium.  In fact, the Ds paid the 3^rd Premium on 8 May 2013.  On the same day, P2 wrote to the BoT to note such fact, and to say further that “I agree as you mentioned if someone is willing to pay for this good cause, why should we bother to take interest free loan”.

53.Two matters can be dealt with briefly. First, P2 in his 5^th affirmation claims that D1 only told BoT he would find funds to pay the 3^rd Premium when he knew the UMAH managed to obtain financial assistance from BoT for the same.  I am unable to accept this.  Even as early as in P2’s 1^st affirmation filed on 23 April 2012 for the purpose of applying for the Ex Parte Order, he noted that the Ds “found donors willing to contribute funds for this purpose to pay the third premium of HK$229,100.00” and even though the Ps were ready to pay the 3^rd Premium in April 2012 the Ds “arranged to pay it without [the Ps’] permission”.  Further, D1’s 2^nd affirmation filed on 2 May 2013 (ie before the Ps secured the loan from the BoT on 7 May 2013) in support of the Discharge Summons already attested to the Ds’ willingness to pay the 3^rd Premium.  There is no merit to Ps’ argument.

54.Secondly, in the course of the Hearing before me, Mr Lo submits that whilst the Ps have no objection to reimburse the Ds for their payment of the 3^rd Premium they are unable to commit themselves on this because they were not sure whether the BoT would grant the loan for such purpose.  However, it appears from the matters set out in paragraph 52 above that after the Ds paid the 3^rd Premium the Ps had no intention to take out the loan offered by BoT to reimburse the Ds.  Yet the Premium Undertaking still remains effective and binding on the Ps, and to date they have not asked for any release from such undertaking.

55.In light of the above background, I turn to two points raised by Mr Lo and Mr Chung before I deal with the core arguments raised by them.

56.First, Mr Lo submits that the Ds are not entitled to half of the costs of the Discharge Summons because they did not get an order in terms of such summons, ie an unless order requiring the Ps to comply with the Undertakings by 3 May 2013.  But when the Discharge Summons first came before Mimmie Chan J on 3 May 2013, it was the Ps who applied for an adjournment (see paragraph 44 above) and by the time of the Hearing the state of affairs had been overtaken by events.  But it is obvious from the Discharge Summons (and the Ps cannot be mistaken) that the Ds consider the Ps should have complied with the Premium Undertaking given to the court more than 7 months ago, and if the Ps do not promptly pay the 3^rd Premium the Continued Order should be discharged.  The Ds cannot be blamed for the subsequent turn of events, ie the Ps obtaining the promise of a loan from the BoT only on 7 May 2013 and the Ds (mindful of the deadline of 9 May 2013) arranged to pay the 3^rd Premium on 8 May 2013. Indeed, as Mr Lo recognises, had it been necessary, the Ds would have been able to apply for amendment of the Discharge Summons to seek appropriate relief in light of the subsequent developments.  In the end, Mr Lo does not seek to pursue such procedural point.

57.Secondly, Mr Chung submits that the Ps did not inform the Ds about their progress in getting in funds for paying the 3^rd Premium; in short the Ds complain they were kept in the dark about when the Ps would pay the 3^rd Premium.  By virtue of the Premium Undertaking, the burden falls squarely on the Ps (and not on the Ds) to pay the 3^rd Premium. In my view, since the Ds are not privy to the Ps’ non‑payment of the 3^rd Premium by 30 September 2012 (ie the deadline as known at the time of the hearing on 13 September 2012) and by the extended deadline of 11 October 2013 and thereafter, it is not unreasonable for the Ds to take out the Discharge Summons on 30 April 2013.

58.I now turn to counsel’s core arguments.  Mr Chung says that the Ds are fully entitled to the variations to the Continued Order set out in paragraph 34 above.  Since the Undertakings envisage that the Ds would become members of the Committee and the Council, Mr Chung submits that it necessarily follows that for so long as they remain such members they should be entitled to attend and participate in the meetings of the Committee and the Council and to hold themselves out as Council members.  It would be pointless for the Ds to be appointed as such members (and almost impossible for them to discharge their functions as such members) if they could not attend and participate in the meetings of the Committee and the Council and/or to represent and hold themselves out to others to be such members.  In such circumstances, it is suggested that the Continued Order was too wide.

59.At the Hearing, Mr Lo sees the force of such proposition, especially when the Ps do not seek to resile from the Undertakings, and do not oppose the variations to the injunction set out in paragraph 34 above.  In my view, such variations are necessary to give effect to the Undertakings, and it can be said that the Ds have achieved some success in varying the injunction.

60.Mr Chung goes on to submit that the root cause for issuing the Discharge Summons is the undisputed fact that the Ps had not paid the 3^rd Premium on or before 30 September 2012 (ie the due date as and when the Ps gave the Premium Undertaking to the court on 13 September 2012) or even on or before 11 October 2012 or thereafter.  As explained in paragraph 57 above, the Ds are not unreasonable in taking out the Discharge Summons on 30 April 2013 after such payment has been outstanding for more than 7 months despite the Premium Undertaking.  The fact that the Ps clinched a deal with the BoT on 7 May 2013 for a loan to pay the 3^rd Premium does not in any way diminish the reasonableness on the part of the Ds in taking out the Discharge Summons and attending the Hearing, which hearing can hardly be avoided since the payment of the 3^rd Premium was only made the day before.  It is the Ds’ case that had the Ps complied with the Premium Undertaking and paid the 3^rd Premium in good time, there would not have been any need for them to issue the Discharge Summons and/or attend the hearing on 3 May 2013 and/or the Hearing, and costs would not have been wasted.  In the circumstances, the Ds claim they should be entitled to half of the costs of the Discharge Summons.

61.On the other hand, Mr Lo argues that the Ds’ contentions can only stand if they did not “sabotage” the Ps’ efforts in soliciting donations for the payment of the 3^rd Premium.  Mr Lo submits that whilst the Ps had made efforts to solicit donations to pay the 3^rd Premium and they eventually (even if it was after the issuance of the Discharge Summons) succeeded in securing a loan from BoT to pay the same, they could not raise sufficient monies from donations during the interim period because of the Ds’ “interference” with donors or potential donors.

62.I find such argument unconvincing and I reject the same.  I am not persuaded by Mr Lo’s suggestion that because the Ps took on the present litigation to oust the Ds (whom the Ps claim to be strangers to the UMAH) to enable the UMAH to refocus on the Project, intrinsically the Ps would not purposely withhold payment of the 3^rd Premium.  First, non‑fulfilment of the Premium Undertaking is a question of objective fact; it does not turn on whether there was any deliberate intent to not comply or whether the Ps had a wishful intent to comply.  Secondly, as evident from paragraph 51 above, the reality is that until 7 May 2013, notwithstanding the P2’s assurance of being ready to pay the 3^rd Premium in April 2012 (see paragraph 39 above) and the Premium Undertaking, the Ps simply did not have the funds (whether sourced from donations or otherwise) to pay the 3^rd Premium.

63.The suggestion by the Ps that they were dependant on donations is not easy to understand when P2 claims the Ps were already ready to pay the 3^rd Premium in April 2012 (see paragraph 39 above) and when they knew the deadline for paying the 3^rd Premium fell on 30 September 2012 as and when they gave the Premium Undertaking to the court on 13 September 2012 (ie about 2 weeks before such deadline).  Mr Lo submits that P2’s assurance in his 1^st affirmation (see paragraph 39 above) was premised on there being sufficient donations. But I am unable to read such qualification in P2’s assurance, especially when P2’s 1^st affirmation made in support of the application for the Ex Parte Order was necessarily governed by a duty to give full and frank disclosure.

64.But more significantly, there is nothing in the affirmation evidence before me to suggest that the Ps required the Ds to cooperate and help them get in the requisite donations before they could fulfill the Premium Undertaking.  The Premium Undertaking does not even say the Ds had to use best endeavours to help the Ps raise donations.  It simply requires the Ps to pay the 3^rd Premium and is completely silent as to how the Ps would source the funds for such payment. In short, the burden is squarely on the Ps to look for the financial means to satisfy the Premium Undertaking.  P2’s assertion that in view of the Undertakings the Ps expected cooperation from the Ds such that the Ps believed there should be no problem in obtaining donations to pay the 3^rd Premium is, in my view, nothing more than an attempt to excuse the non‑fulfilment of the Premium Undertaking.  Quite simply, there is no obligation on the Ds to assist the Ps to comply with the Premium Undertaking even though the Ds were ready to pay the 3^rd Premium as early as in April 2012 (see paragraph 39 above).  In any event, there is nothing in the affirmation evidence before me to suggest that at the time when the Ps gave the Undertakings to the court (ie on 13 September 2012) cooperation from the Ds would have generated sufficient donations to pay the 3^rd Premium by the then deadline of 30 September 2012 or thereafter.  The bare assertion by P2 that there were donors in September 2012 who were happy to make donations for payment of the 3^rd Premium in support of the Project is not supported by identification of the available donors or disclosure of the amount of donations pledged.  Further, even if there were such willing donors in September 2012, there is no explanation why the 3^rd Premium was not paid before the deadline of 30 September 2012 in view of the Premium Undertaking and before any alleged “sabotage” by the Ds.

65.P2 claims that despite the Ps’ efforts, donors were reluctant to make sums available to them.  “[P2] verily believe that the [Ds] were still spreading rumours that they and their associates are the valid Council of the [UMAH].  [P2] verily believe that some donors were hesitant to be seen as siding with [the Ps]”.  I am not persuaded by such arguments.  Even if donations were not forthcoming to the Ps, it does not necessarily follow that the Ds must be spreading the rumours as alleged.  Such leap in faith is not grounded on sufficient factual foundation.  Moreover, as explained in paragraph 42(c) above, pending determination of the merits at trial the Ds are not required to abandon their stance that they and their associates constitute the true Council.  Their stance alone without overt representation or holding out to others that they are members of the Council does not infringe the Continued Order.  Hence, at this interlocutory stage, the Ds cannot be blamed for donors or potential donors being hesitant or reluctant as a result of their awareness of the divergent stance of the Ps and the Ds within the UMAH, and this state of affairs is already known to the Ps when they gave the Premium Undertaking to the court (see paragraph 42(b) above).

66.P2 further claims that given the reluctance of previous or potential donors which the Ps approached, they sent general appeals to the Muslim community hoping to procure some donations to be directly used to pay the 3^rd Premium, and made personal appeals to friends and business associates for donations.  But all that was disclosed were four letters sent to the Muslim community in the name of the UMAH on 5 October 2012.  No replies were disclosed, and there is no evidence as to what further follow‑up efforts were made by the Ps when the extended deadline on 11 October 2012 expired without any payment of the 3^rd Premium.  In my view, the affirmation evidence fell short of establishing adequate efforts by the Ds to solicit donations to meet their obligation under the Premium Undertaking to pay the 3^rd Premium.

67.So even if the Ps had made efforts to solicit donations, such efforts patently fell short of attracting sufficient donations to fulfill the Premium Undertaking. The next question is whether the inadequacy of the donations was due to overt “interference” and/or “sabotage” by the Ds.  As explained, it is not enough at this interlocutory stage for the Ps to say that the Ds fail to abandon their pleaded case that they were the true Council members.

68.P2 claims that because of the interference of the Ds the Ps were unable to convince the banks to allow them to make withdrawals from the bank accounts when there is about HK$1 million deposited in the UMAH’s bank account with the SCB.  P2 goes on to say that some donors had indicated that they were prepared to pay into the UMAH’s bank accounts but such bank accounts had been effectively frozen.  I am not persuaded that these contentions assist the Ps.  As pointed out by D2 in his 2^nd affirmation, the Ps knew the state of the bank accounts ever since Alli Din’s death, which means they were well aware that the UMAH’s bank accounts were frozen when the Ex Parte, Varied and Continued Orders were made.  They also knew all along it was the Ds’ case that they claim to be true Council members, the merits of which cannot be resolved until trial, yet they gave the Premium Undertaking to the court without any qualification or any requirement that the 3^rd Premium be paid out of the UMAH’s monies in the bank accounts.

69.P2 suggests it would not be appropriate to engage the bank in satellite litigation to release monies to the UMAH with incurrence of further legal costs, and that the Ps preferred to reach some agreement with the Ds for release of the monies in the banks, but their efforts in liaising with the Ds were in vain because the Ds failed to respond to their overtures as regards the formation of the Committee.  Again, I cannot accept such explanation.  I see no reason why the Ps have to sue the bank when they could have made an inter partes application to the court for appropriate relief in respect of the application of the UMAH’s monies with the banks for payment of the 3^rd Premium.  Then it will be up to the Ds to decide whether to put up any resistance, and for the court to decide whether to grant such order, which if granted can simply be served on the bank for compliance.  More significantly, irrespective of whether or not the Ds had been responsive to the Ps’ overtures on the formation of the Committee, there is simply no evidence of any request made to the Ds to unfreeze the accounts and for release of the bank monies to pay the 3^rd Premium whether by the Ps or through their solicitors.  I bear in mind that the four Undertakings given to the court by the Ps were not expressed to be conditional upon one another.

70.There has been some suggestion that because the Ds did not promptly respond to the Ps’ request for the formation of the Committee and they even suggested replacing Amjad Niaz by Mohammad Hanif even though the former was named as a Committee member in the Undertakings, the Ds were deliberately obstructive.  However, I cannot see this as being relevant to the Premium Undertaking which is not dependant on the formation of the Committee.  I am not persuaded by Mr Lo’s argument that had the Ds cooperated promptly in relation to the formation of the Committee, donations would have poured in sufficiently to pay the 3^rd Premium.  As Mr Lo has also submitted, the donors or potential donors are reluctant with their donations as a result of the Ps and Ds maintaining opposing stance as to who are the true members of the UMAH and the Council, which dispute was already known since early 2010 and which, as Mr Lo acknowledges, can only be resolved at trial.

71.In such circumstances, I agree with the Mr Chung that the burden falls squarely on the Ps to pay the 3^rd Premium which they have not done up to 7 May 2013, and the Ds are entitled to the variations to the Continued Order in light of the Undertakings. Given that the Ps have not been open with the Ds about the non‑fulfilment of the Premium Undertaking and have not taken prompt remedial steps to approach the Ds or apply to the court for adjustment of the Premium Undertaking or utilisation of the monies of the UMAH with the banks to pay the 3^rd Premium, I find the Ds were justified in taking out the Discharge Summons.  It is therefore inappropriate to grant the entirety of the costs of such summons to be costs in the cause.  Nevertheless, it is also inappropriate to grant costs directly in favour of the Ds at this stage because the ultimate merits of the parties’ respective stance have yet to be determined.  The Ds should only be entitled to defendants’ costs in the cause for half of the costs of the Discharge Summons.

72.I therefore grant the following order:

(a)   half of the costs of the Discharge Summons (including costs of the hearing on 3 May 2013 and the Hearing, and all costs reserved if any) be costs in the cause;

(b)   half of the costs of the Discharge Summons (including costs of the hearing on 3 May 2013 and the Hearing, and all costs reserved if any) be defendants’ costs in the cause.

Mr Tommy Lo, instructed by Tang & Tang, for the 1^st to 7^th plaintiffs

Mr Hylas Chung, instructed by Yu Sun Yau Mak & Lawyers, for the 1^st to 3^rd defendants