Re Wong Tai Sin Yuen Ching Kwok

HCMP 3418/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3418 OF 2013

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J U D G M E N T

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1.This is an application by Wong Tai Sin Yuen Ching Kwok (“Company”) to rectify a number of non-compliances of ss 111 and 122 of the Companies Ordinance, Cap 32 (“Ordinance”) in respect of the financial years 2011 to 2013. 

2.The Company was incorporated on 20 April 1978 and is limited by guarantee.  In January 2001, it was listed as a charity under s 88 of the Inland Revenue Ordinance, Cap 112. The primary objectives of the Company are to encourage people to do good in accordance with the doctrine of Wong Tai Shin Shi, promote the preaching of such doctrine and to engage in works of general charity relief.  As of January 2014, the Company has 465 members, amongst whom about 200 are said to be active members. 

3.Prior to December 2010, the Company was managed by an Administrative Committee (“AC”) made up of 10 members.  These members were “appointed” by “Master Wong Tai Shin Shi”, which was a religious ritual. In December 2010, a 9-member Board of Directors / Executive Committee (“EC”) came into existence.  However, the members of EC were also appointed by religious ritual.  After the establishment of the EC, the external affairs of the Company were dealt with by the same, whilst the AC continued to look after the administrative work within the Company.

4.It appears that sometime in the middle of 2011, there was disagreement amongst the members of the Company concerning the control of a large amount of money which came from donations and was intended to be used for rebuilding the Company’s temple.  There was also disagreement over whether a columbarium should be run by the temple.  These disagreements had fragmented the members into 2 factions. 

5.The division of the members spilled into the management of the Company and hampered its proper functioning.  The matters came to a head in July 2011 when some members demanded the election of the EC in accordance with the constitution of the Company.  Litigation followed in September 2011.  Eventually, on 9 December 2012 an election was held.  There were 15 members elected to the EC but only 13 of them accepted the appointment.  Since then the EC has been managing all the affairs of the Company. 

6.After the disagreement had developed and until the conclusion of the election, the management of the Company was in limbo. Its members were consumed by the litigation, updating of the list of members and the election which ensued.  As a consequence, there was no AGM held for the years 2011 to 2013. 

7.However, I have been informed by Ms Tsui, who appears for the Company, that there is a technical defect in respect of the Company’s application for relief under s 111(2) of the Ordinance in that it ought to be made by a member of the Company. Accordingly, this part of the application has been withdrawn.

8.In addition to the failure to hold AGMs, the financial statements for 2011 were not put before the members.  As for those of 2012 and 2013, the preparation of the same was delayed because of the neglect by the management. 

9.The applicable principles by which the court should exercise its power to grant relief in these circumstances pursuant to s 122(1B) of the Ordinance are well-established. 

10.The financial affairs of the Company are fairly simple.  It depends upon donations for income and has little expenditure because much of the works carried out by its members were done without remuneration.  Monthly accounts were posted up on the notice board at the office of the Company.  It thus appears that the members were informed of the finance of the Company (putting aside the period of disruption caused by the disagreement amongst the members) and are not prejudiced by the non-compliances in question.

11.I am satisfied that the defaults were inadvertent.  It is a case of ignorance over the responsibilities under s 122 of the Ordinance coupled with the fact that the attention of the management was distracted by the disagreement amongst the members.

12.I am also satisfied that the management has learned a good lesson.  The evidence is that a new system has been put in place to improve the efficiency in producing the material needed by the Company’s accountants to produce the financial statements.

13.In the premises, I grant the order set out in para 26 (iii) and (ii) of the Company’s skeleton submissions dated 23 May 2014 as amended.  

Ms Mabel Y S Tsui, instructed by John W Wong & Co, for the applicant