CHEUNG KAM WAH v. KAMMY TOWN LTD

HCMP 874/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 874 OF 2007

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D E C I S I O N

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1.  This is an application made by Cheung Kam Wah under section 168BC of the Companies Ordinance, Cap. 32, for leave to bring proceedings on behalf of the company concerned, Kammy Town Limited (“the Company”) to recover a property held by Madam Kee Fong allegedly as trustee for the Company, being the property at 11^th Floor including Roof at No. 25 Soares Avenue, Kowloon (“the Property”).

2.  There are two shareholders of the Company, being the applicant and his brother Cheung Hon Wah.  They have been at loggerheads since 2002.  They have brought a number of proceedings against each other, including a derivative action on behalf of the Company, a petition for relief under section 168A, and a petition to wind up the Company on the just and equitable ground.

3.  The applicant and his brother used to be the only directors of the Company.  The brother was removed in May 2004 and replaced with the sister.  The appointment of the sister is challenged by the brother.

4.  In an action which the applicant caused the Company to bring against a company controlled by the brother, the brother sought to strike out the action on the ground that the proceedings were brought without the authority of the Company.

5.  So although the Company could, acting by its board of directors, authorise an action to be brought against Madam Kee, to avoid any potential challenge by the brother, the applicant’s solicitors have sought the brother’s consent to a shareholders’ resolution to authorise proceedings to be brought.  As no response was received from the brother to the letter of the applicant’s solicitors dated 3 April 2007, this application was issued on 8 May 2007.

6.  On 26 April 2007, the applicant served notice on the Company that he intended to make an application under section 168BC for leave to bring proceedings on behalf of the Company against Madam Kee.  Under section 168BD, the period of notice required to be given is 14 days, before the applicant may issue proceedings under section 168BC, unless the Court sees fit to grant leave to dispense with service of the requisite notice.  On 4 May 2007, the applicant made an ex parte application under section 168BD(4) for leave to dispense with the required notice.  I have made an order giving leave on 7 May 2007, in effect abridging the period of notice.  This application under section 168BC was issued the following day.

7.  I have considered the evidence filed by the applicant on the intended claim of the Company against Madam Kee and the draft statement of claim.  I am satisfied there is a serious question to be tried as between the Company and Madam Kee whether the latter is holding the Property on trust for the Company.  The Company has not as yet brought proceedings due to the unresolved disputes of its shareholders.  There would appear to be some urgency in bringing proceedings against Madam Kee as the Property might be sold to an interested developer any time.  It would appear prima facie in the interest of the Company for proceedings to be brought.

8.  I grant relief sought in the originating summons with costs to the applicant in this application to be indemnified by the Company.  I give liberty to apply regarding the costs incurred by the applicant in the proceedings to be brought by the Company against Madam Kee.