LUCK CONTINENT LTD v. LEONORA YUNG AND OTHERS

HCA 2246/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2246 OF 2009

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J U D G M E N T

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Introduction

1.  The Plaintiff company obtained an ex parte injunction against the Defendants from Suffiad J on 10 November 2009.  I will explain the matter more fully in a moment but for present purposes it is sufficient to indicate that the Defendants were restrained by the injunction until 13 November from, amongst other things, disposing or in any way dealing with certain shares and warrants in C Y Foundation Group Limited (“C Y Foundation”) and in the certificates that represented those shares and warrants which are the subject matter of this action.  The injunction also required delivery up by the Defendants of the certificates within 24 hours of service on them of the order.  This part of the injunction was complied with on 12 November.

2.  The return date for the ex parte order on 13 November was disposed of under a consent order that I was asked to make.  Under it, the Plaintiff undertook to repay to the 3rd Defendant the sum of $5 million being a loan made under an agreement in writing dated 23 January 2009 but without admitting the 3rd Defendant’s case that the 3rd Defendant held any kind of possessory lien over the certificates as security for the repayment of this loan.  The repayment was made on 13 November.  I also gave agreed directions in respect of further evidence that the parties respectively wished to file in support of the injunction and its discharge.

The parties

3.  The Plaintiff, a BVI company, is the largest shareholder in C Y Foundation which is listed on the Hong Kong Stock Exchange.  Mr Poh Po Lian is the Plaintiff’s sole director and shareholder.  Between 15 February 2007 and 28 April 2009 he was also an executive director of C Y Foundation after which he continued as a non-executive director until he resigned from that position on 22 July 2009 due to his other business commitments.  The Plaintiff holds 41.636% of C Y Foundation’s issued shares made up of 32.195% held under CCASS and 9.441% represented by shares certificates issued to and registered in Mr Poh’s name.

4.  The 1st Defendant, Madam Leonara Yung is a member of a prominent business family both here in Hong Kong and in the PRC.  Her husband, Mr Theodore Cheng, is the chairman and an executive director of C Y Foundation.  Madam Yung owned 27.65% of the shares in C Y Foundation held through various companies which she owns.  Under the terms of section 316(17)(a) Securities and Futures Ordinance, Madam Yung and Mr Cheng, by virtue of their relationship as husband and wife, are connected parties and are together deemed to be interested in this 27.65% shareholding.

5.  The 2nd Defendant, Miss Cheng Lai Yin has worked for Mr Poh and Madam Yung and until the start of this action was on good terms with Mr Poh, to the extent that Mr Poh would entrust aspects of his financial affairs to her.  He was content to pre-sign blank cheques for her to keep and co-sign as and when necessary, this as recently as 10 days before Suffiad J granted the ex parte injunction when she co-signed a cheque made payable to the Plaintiff’s solicitors.

6.  The 3rd Defendant, Feng well Property Corporation, is also a BVI company.  Miss Cheng is its sole shareholder and director, although in this regard Mr Poh asserts that she is no more than a front or nominee for Madam Yung. 

Two loans

7.  I have already referred to the first of these two loans under a written loan agreement by which Mr Poh was lent $5 million by the 3rd defendant which he has now repaid as part of the terms of the consent order that I made on 13 November.  The second loan was a personal one owed by Mr Poh to Madam Yung in the sum of $2.18 million, repayment of which was demanded by Madam Yung on 10 November 2009.  This debt has now also been discharged.  Both of these loans have played a part in the background to this action and I will need to make further reference to them presently.

The circumstances in which the action has been brought

8.  As appears from the amended endorsement of the claim [Court Documents/4] the claim is one for conversion against all three Defendants in respect of 600,014,127 shares in C Y Foundation and registered warrants [certificate nos. 7 to 12] for the subscription in further shares in C Y Foundation.  The relief sought is for delivery up of the certificates, which has now taken place under the terms of the consent order of 13 November, together with damages for conversion of the certificates “and/or conspiracy to do so”.

9.  In view of the fact that the Plaintiff has achieved the return of the share certificates and warrants, the purposes of the injunction have now been secured so far as it is concerned.  What is left over is the issue of the costs of the injunction.  The Plaintiff is seeking an order for its costs to be paid forthwith on the basis firstly, that it was perfectly justified in making the application for an ex parte injunction and secondly, given the fact that the share certificates have now been handed back, that a trial of this action is unlikely to take place in which circumstances it should not have to wait any longer to have its costs.  For their part, the Defendants say a number of things including, that there was no justification for the making of the application for the injunction and certainly not on an ex parte basis in which circumstances the injunction should be formally discharged and that they should have their costs taxed and paid forthwith.

10.  Given the stances adopted by the parties, I have to go back to square one, as it were, and consider whether it was reasonable for the Plaintiff to apply for the injunction and additionally, whether there was justification in all the circumstances to go ex parte.  In terms of the hearing itself, I have heard first from Mr Winston Poon SC on behalf of the Defendants, who has argued for a discharge based on a number of grounds which I will need to go through, followed by Mr Yan SC, who as submitted that it was entirely reasonable to have come ex parte and that none of Mr Poon’s complaints are valid.

11.  Before I go to Mr Poon’s submissions, it will be helpful to briefly traverse the evidence which led to the Plaintiff issuing the writ and making the application ex parte to Suffiad J.

12.  As to the whereabouts of the certificates, the Plaintiff’s case is that leading up to the issue of the application for the injunction, the Defendants had behaved both evasively and suspiciously leaving it with no other alternative but to come to court as a matter of urgency.

13.  The shares and warrants in question were acquired by the Plaintiff in about January 2007, which was at the time of the takeover of C Y Foundation by the Plaintiff controlled by Mr Poh and companies controlled by Madam Yung.  Originally, the certificates had been deposited with Mrs Joan Kwok, who was the C Y Foundation’s company secretary.  She together with the 2nd Defendant and a Mr Philip Yu had been entrusted to look after Mr Poh’s affairs in relation to the Plaintiff company and C Y Foundation.  Mr Yu had been a personal consultant to the 1st defendant’s husband, Mr Theodore Cheng and to Mr Poh.  Nowadays, he is only consultant to the 1st Defendant and Mr Cheng.  After 2007, there were a number of changes to the company secretarial position at C Y Foundation but Mr Poh was content that the certificates were in safe custody at C Y Foundation’s offices.

14.  One can now move forward to November 2009 and more particularly to 13 November 2009 which was to be the date of a Special General Meeting (“SGM”) of C Y Foundation at which its shareholders were to consider a number of Resolutions which I can now set out here:

“(1)  approve, confirm and ratify the entering into of the Subscription Agreement dated 21 August 2009 (the ‘Subscription Agreement’) between Paradise Entertainment Limited (‘PEL’) as the issuer and C Y Foundation as the subscriber in relation to the subscription by C Y Foundation of:-

(1)   the 6% convertible notes in the aggregate principal amount of HK$20,000,000 due 24 months (the ‘New Convertible Notes’);

(2)   the option to subscribe for the additional convertible notes in the aggregate principal amount HK$20,000,000 on the same terms (the ‘Additional Notes’); and

(3)   all the other transactions contemplated under or incidental to the Subscription Agreement including the conversion of the New Convertible Notes and the Additional Notes (assuming the aforesaid option is exercised); and

(2) authorize the directors of C Y Foundation to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the Subscription Agreement and all transactions contemplated thereunder (the ‘Transactions’).”

15.  Without going into this matter in any great detail, what was intended was for C Y Foundation to tie itself in with PEL in its gaming business.  On 26 August 2009, C Y Foundation had issued an announcement to the Stock Exchange and on 20 October 2009 a circular outlining its proposals.  Mr Poh was of the view that what was being proposed and what was to be voted on at 13 November SGM would not confer any commercial or economic advantage to C Y Foundation and that, on the contrary, these proposals might well expose C Y Foundation to real and serious risk of substantial losses.  In this regard, Mr Poh has set out his concerns in his first Affirmation at paras. 55-65, C/109-114.

16.  In such circumstances, he reasoned that it was of the greatest importance that the Plaintiff company should be able to voice its concerns at the SGM and vote against the Resolution.  This would be done by voting the Plaintiff’s existing shareholding and by exercising its right to subscribe for further shares in C Y Foundation through the exercise of its Options under the terms of the Warrants.  By doing so, it would be able to significantly increase the Plaintiff’s shareholding and voting strength in C Y Foundation and to actually make use of its vote at the SGM to defeat the Resolutions.

17.  In early November 2009, with this in mind, Mr Poh enquired of the various persons to whom I have already made reference as to the whereabouts of the share and warrant certificates.  Mr Yu told him that these certificates had been passed to each other by the various company secretaries of C Y Foundation since Miss Kwok had left and that they had been taken most recently by the 1st defendant from the current company secretary, Mr Lau Ying Kit.  In such circumstances, Mr Poh asked his solicitors to request the 1st Defendant and Mr Lau to return the certificate to him.  What then ensued was an exchange of correspondence which Mr Yan has analysed and which is the basis of his submission that, faced with delay and obfuscation from the Defendants rather than a perfectly simple answer to his request for the whereabouts and return of his certificates, the Plaintiff had been wisely advised to make the ex parte application for the injunction.

18.  The whole of the correspondence is in the bundle of correspondence as exhibits to Mr Poh’s first affirmation.  I propose to provide a summary of it.  Suffice it to say that it starts at C/1015 and concludes insofar as it is relevant for these purposes, at C/1124.

The correspondence leading to the issue of the writ

19.  The first letter on behalf of the Plaintiff is dated 2 November 2009 directed to the 1st Defendant and to Mr Lau, the company secretary of C Y Foundation.  I am bound to say it was perhaps an unnecessarily strong letter:

“… to demand you to forthwith, in any event by 4 p.m. on Tuesday, 3 November 2009 [the following day] deliver all the said certificates …, failing which our client will have no alternative but to commence legal action … etc.”

The letter then went on to threaten consequential damages for wrongful detention and conversion [C/1015-1016].  This produce a faxed letter the following day from Mr Lau in which he said that he never had custody of the certificates, neither did he allow the 1st Defendant to obtain custody of them [C/1036].  This letter was also signed by the 1st Defendant, presumably to adopt its contents.

20.  On the same day, the 1st Defendant was written to on behalf of the Plaintiff [C1037-1038].  The letter demanded to know from the 1st Defendant whether she had custody of any of the certificates and if she did not, whether she had at any time had possession of them and if so what had become of them.  The letter wanted her answers by the next day, 4 November, no later than 3:30 p.m. otherwise a writ would be issued against her and an injunction would be applied for.

21.  Mr Yu was written to on 4 November [C/1042] requiring answers as to the whereabouts of the certificate by 3:30 p.m. on the same day.  This at least produced a positive response because Mr Yu faxed his reply on the same day to say that he believed the certificates were in the possession of the 2nd Defendant.

22.  In such circumstances, she was written to in the same strong terms as the others wanting an answer as to the whereabouts of the certificates by 1 p.m. on 5 November.  The letter itself is also dated 5 November and was apparently received at 9:55 a.m.  A copy of this letter was also sent to the 1st Defendant thereby keeping her abreast with what was going on [C/1086].

23.  On the same day, the Plaintiff’s solicitors issued the writ on 1st and 2nd Defendants for the return of the certificates and for damages for conversion.  At 2:05 p.m. on 5 November, the 3rd Defendant (at that time still to be joined in the action) wrote to the Plaintiff’s solicitors and said that it had custody and possession of the certificates.  Nevertheless, the letter also went on to say that Mr Poh owed the 3rd Defendant, as it was to become, $5 million and demanded the return of this money within 14 days, failing which it would sue him for it and apply to bankrupt him if necessary as a means to oblige him to return this sum of money.

24.  On the following day, the Plaintiff’s solicitors amended the writ to join the 3rd defendant [C/1112-1114].  On the same day, 6 November, all three Defendants were written to by the Plaintiff’s solicitors.  Given its importance I will set out the letter in full.  It is at pages C1115-1117:

“We refer to the letter dated 5^th November 2009 from Feng Well Property Corp. (‘Feng Well’) (signed by Ms. Cheng Lai Yin (‘Ms. Cheng’), its sole director and shareholder, for and on its behalf) to us in response to our letter dated 5 ^th November 2009 to Ms. Cheng.  (The expressions used herein shall have the respective meanings as defined in our letter dated 5 ^th November 2009 to Ms. Cheng.)

Here is absolutely no justification whatsoever for your failure and/or refusal to deliver the said Certificates to our firm on behalf of our client as demanded.  Our client does not dispute that an interest-free loan of HK$5 million has been granted by Feng well to Dato Poh Po Lian (‘Dato Poh’).  However, you do not have any right or interest whatsoever over the said Certificates, the said shares and/or the said Warrants (or any part thereof) of Luck Continent Limited.

Moreover, although Feng Well is on the face of it owned and controlled by Ms. Cheng, we are instructed that in truth and in fact, Feng Well is nothing more than a vehicle or agent of Ms. Leonora Yung.  The said loan was negotiated and discussed between Dato Poh and Ms. Yung.  Ms. Cheng is merely an employee of C Y Foundation (or a subsidiary or associated company thereof), and does not have the means and assets to advance the said loan of HK$5 million through Feng Well to Dato Poh.  In the circumstances, Feng Well is ultimately owned and controlled by Ms. Yung, and Ms. Cheng is merely a ‘front’ or nominee or agent of Ms. Yung in relation to these matters.

By reason of the matters aforesaid, Ms. Yung, Ms. Cheng and Feng Well are liable to our client for conversion of the said Certificates and/or conspiracy to convert the same for their own use and benefit.

The said Certificates represent assets of very substantial value.  The value of the said Shares alone already amounts to not less than HK$60 million (based on the closing price on 5^th November 2009 of HK$0.10 per share).  Moreover, the said Shares represent a very significant percentage, namely, approximately 9.44% of the voting rights of shareholders in general meetings of C Y Foundation.

The voting rights attached to the said Shares are also of great significance, especially in view of the forthcoming Special General Meeting of C Y Foundation to be held on Friday, 13^th November 2009, at which the shareholders of C Y Foundation will consider, and if thought fit, pass resolutions to:-

(1) approve, confirm and ratify the entering into of the Subscription Agreement dated 21^st August 2009 (‘the Subscription Agreement’) between Paradise Entertainment Limited (‘PEL’) as the issuer and C Y Foundation as the subscriber in relation to the subscription by C Y Foundation of:-

(a)   the 6% convertible notes in the aggregate principal amount of HK$20,000,000 due 24 months (‘the New Convertible Notes’);

(b)   the option to subscribe for the additional convertible notes in the aggregate principal amount HK$20,000,000 on the same terms (‘the Additional Notes’); and

(c)   all the other transactions contemplated under or incidental to the Subscription Agreement including the conversion of the New Convertible Notes and the Additional Notes (assuming the aforesaid option is exercised); and

(2) authorize the directors of C Y Foundation to do such acts and execute such other documents as they may consider necessary, desirable expedient to carry out or give effect to or otherwise in connection with the Subscription Agreement and all transactions contemplated thereunder, including the conversion of the New Convertible Notes and the Additional Notes (assuming the aforesaid option is exercised).

As indicated in our letter dated 30^th October 2009 to Mr.Cheng Chee Tock Theodore (‘Mr. Theodore Cheng’), the Chairman and Executive Director of C Y Foundation (and the husband of Ms. Yung) (copy enclosed for your reference), our client takes the view that the Subscription Agreement and the transactions contemplated thereunder or incidental thereto (collectively, ‘the said transaction’) are clearly not in the interests of C Y Foundation in that not only do they not confer any conceivable commercial or economic advantage or benefit to C Y Foundation, but they will also unnecessarily expose C Y Foundation to real and serious risks of substantial financial loss.

If the said Shares are transferred to parties acting in concert with Ms. Yung and Mr. Theordore Cheng, then the relative voting strength between our client on the one hand and the camp to Mr. Theordore Cheng and Ms. Yung on the other hand will be reversed in favour of the latter and will enable them to pass the aforesaid resolutions against the wish of our client and to the detriment of C Y Foundation.

In the circumstances, there are real and serious risks of the said Certificates and/or said Shares and the said Warrants represented by the said Certificates being disposed of, particularly in view of the forthcoming SGM, at which the aforesaid highly controversial matters would be determined.

Therefore, unless by 5:00 p.m. today, i.e. Friday, 6 ^th November 2009, you give the following undertakings to the Court, that is to say:-

1.  not to, whether by yourselves, your employees, agents, nominees (and in the case of Feng Well, its directors and/or officers) or otherwise howsoever dispose of the said Certificates, the said Shares and/or the said Warrants (or any part thereof) and/or the shares of Feng well; and

2.  to forthwith deliver up the said Certificates to an independent and reputable firm of Certified Public Accountants designated by other client pending the determination of the above action or until further order.

our client will have no alternative but to apply for the appropriate interlocutory injunctions and interim orders as our client may see fit without further notice to you.

Kindly also take notice that we shall shortly add Feng Well as the 3rd Defendant in the above action.  In the meantime, all our client’s rights, powers, remedies and relief are reserved.

As regards the loan of HK$5 million, we are instructed that Dato Poh will arrange for repayment of the same within the 14 days period.  Please specify the account details of Feng Well for the purpose of such repayment.”

25.  And so, here in very great detail was the Plaintiff’s and Mr Poh’s case on the importance of the share certificates and an admission of the $5 million debt and Mr Poh’s willingness to repay it to the 3rd Defendant within 14 days.

26.  The replies came later that day at just after 6 p.m.  The 1st Defendant replied briefly to say that “There is no substance whatsoever of your client’s … alleged fear of the shares being transferred to parties acting in concert with me and my husband”.  The letter went on to say that any action would be “hotly contested” [C/1122].  The 3rd Defendant replied by fax 6 minutes earlier, effectively in identical terms [C/1123].  Mr Yan has referred to the fact that no undertaking was forthcoming from any of the Defendants, as had been asked for in the Plaintiff’s solicitors’ letter of 4 November supra.

27.  Reference should also be made to the fact that the Plaintiff had asked for a Special General Meeting to be convened to deal with Mr Poh’s concerns, but a reply came on 6 November from C Y Foundation’s Hong Kong-based lawyers to say that because the Plaintiff only had issued to it 9.44% of the shares (less than the necessary 10%), it could not request a Special General Meeting.  This letter apparently ignored the 32.195% held under CCASS.  Mr Yan says that in the then current climate between these parties this served to heighten Mr Poh’s anxiety and concern for the share certificates.

28.  The 6 November was a Friday.  On Monday the 9 November the Plaintiff’s solicitors wrote to the Board of Directors of C Y Foundation requesting a postponement of the SGM until after an independent committee had reported on the wisdom of the subscription.  On the same day [C/1139], the 1st Defendant wrote to Mr Poh requiring him to repay her forthwith a loan of $2.18 million that she had advanced to him and threatened proceedings to recover the loss together with bankruptcy proceedings in the event that the judgment was not complied with.

29.  Finally, on 10 November [C/1140] the Plaintiff’s solicitors wrote to all three Defendants telling them that it would be applying to the High Court for an injunction which is what was obtained later that afternoon from Suffiad J.

30.  On 11 November [C/1141] the 3rd Defendant’s solicitors wrote to the Plaintiff’s solicitors to assert a possessory lien over the certificates by virtue of the outstanding loan of $5 million owed to it by the Plaintiff and/or Mr Poh.  The letter said that the certificates would only be returned on the repayment of the loan, and it also went on to say that it was never the intention of the 3rd Defendant to make use of the certificates, nor could it do so to write against the interests of Mr Poh and of the Plaintiff.

31.  On 13 November under the consent order made by me, the certificates were returned to the Plaintiff.

32.  It is therefore on all of this material that the matter has fallen to be argued and will have to be decided by me.

The arguments

33.  Mr Winston Poon has addressed me first.  At bottom his submission is that there was no necessity for the Plaintiff to have gone ex parte, there being no urgency, and certainly not to the duty judge.  The application should have gone to the companies judge, this being a companies matter.  Additionally, the Plaintiff had not made full disclosure to the duty judge.  And lastly, when one examines the matter properly it should have been obvious, and it would certainly have been obvious to the companies judge, that there was no risk of the Plaintiff’s and Mr Poh’s certificates being misused.  Such a thing simply could not have happened.  I will therefore need to examine each of these matters.

34.  Mr Poon’s starting point is that once the Plaintiff’s solicitors had received confirmation from the 3rd Defendant that it had the certificates, there was no need for the action and certainly none to bring proceedings against the 1st and 2nd Defendants.  A calm appraisal of the situation by those advising the Plaintiff and Mr Poh should have resulted in an understanding by them that none of the risks which the Plaintiff’s solicitors’ letter of 6 November had referred could have eventuated.

35.  The next point is that a fortiori, there was no need for an ex parte application with no proper notice given to the Defendant’s solicitors although the Plaintiff’s solicitors had purported to give such notice.  There was simply no urgency for such a course to be taken.

36.  Related to the ex parte hearing are two additional complaints, firstly, that the application should not have gone to the duty judge but to the companies judge.  This because, Mr Poon submits, the companies judge would be more familiar with matters relating to the internal management of listed-companies and would quickly realise that there was no need for the application for the injunction, especially on an ex parte basis. 

37.  Secondly, Mr Poon submits that there had been material non-disclosure to the ex parte judge or, at the very least, matters drawn to his attention had not been explained to him in a fair and balanced way.  The primary basis of Mr Poon’s complaint is that it should have been made clear to the judge that as the certificates were registered in the Plaintiff’s name, it would have been impossible for anybody else to make use of them to vote them at 13 November SGM, or to have them transferred into their name.  Mr Poon has also drawn attention to the detailed steps that would have been required to transfer ownership of the shares out of the Plaintiff’s name and the required involvement of the share registrars in Bermuda and Hong Kong, these being Butterfield Fund Services in Bermuda and Tricor Secretaries in Hong Kong.

38.  Next, Mr Poon has also complained that the judge was rather misled on the question of how the 3rd Defendant had come into possession of the share certificates and he had been told that no defence had been suggested by the Defendants as to their possession of the certificates when, in fact, the 3rd Defendant was asserting a possessory lien over the shares in respect of the $5 million loan to the Plaintiff by the 3rd Defendant.

39.  As to the warrants, the judge had been presented with picture that it was the Plaintiff’s intention to increase its voting rights at the SGM by exercising its rights under the warrants when under the conditions for the exercise of those rights, there simply would have been no time for those rights to be exercised.

40.  Mr Yan has responded to each of these complaints.

41.  As to not going to the companies judge, Mr Poon has based his submissions on Practice Direction 11.1, para.13.  Mr Yan says that this action does not fall within the subject matter of this Practice Direction which concerns itself with “proceedings involving any matter relating to the internal management of companies”.  This action is simply one for the conversion of share certificates and so at this stage does not get involved at all with the internal management of a company.  In this regard, it seems to me that Mr Yan’s point is unanswerable.  It was correct to have gone to the duty judge as opposed to the companies judge.

42.  As to the complaint that proper notice had not been given, this point must stand or fall on the issue of whether there was justification in coming ex parte in the first place to which I will come presently.  Mr Poon says that the judge had been misled by leading counsel for the Plaintiff (not Mr Yan on that occasion) as to what arrangements had been made to inform the Defendant’s solicitors of the hearing.  I have considered the material in this regard and it seems to me that at no time had counsel suggested to Suffiad J that notice have been given to the Defendants who had chosen not to attend.  On the contrary, he had told the judge that the letter giving notice had not been served on the 1st and 2nd Defendants.

43.  As to the allegation of material non-disclosure, it is important to note that the judge had been provided with Mr Poh’s bulky affirmation together with it exhibits and most importantly the recent correspondence to which I have drawn attention.  When one considers all of that material and on a reading of Mr Mok SC’s skeleton before the duty judge, there is no question that the matter was being presented to him in a comprehensive and balanced way.  In respect of all of Mr Poon’s individual complaints, Mr Yan in his Note in reply to Mr Poon’s skeleton has sought to provide responses on this part of the application for a discharge of the injunction.  These are detailed responses and I am satisfied that Mr Yan’s analysis is the correct one.  It would not be fair to characterise the ex parte application as one that contained material non-disclosures or that issues had been placed before Suffiad J in an unfair or unbalanced way.

The overall situation at the time of the ex parte application

44.  The starting point it seems to me is that Mr Poh was genuinely concerned as to the whereabouts of the Plaintiff’s share certificates then valued at $60 million against the setting that on 13 November a SGM was to take place which in his view would well result in C Y Foundation entering into commercially improvident arrangements with PEL(supra).  Whilst it is absolutely correct for Mr Poon to have addressed me with all the benefit of calm reflection after the event on what the risks, or put more correctly the lack of them, were of the share certificates being misused at the SGM, it seems to me that I need to assess what the effect of the correspondence from the Defendants would have been on a reasonable shareholder faced with this situation.  It strikes me that at the beginning of the exchange of correspondence, within a very short time scale of about a week, with the SGM fast approaching, the position about the certificates and their whereabouts could and should have been made clear by the Defendants almost immediately. There would have been no reason not to do so.  Eventually, three days after the first enquiry on 2 November, the 3rd Defendant wrote to say that it had possession of the certificates.  One might have hoped that this would be the end of the matter for the Plaintiff with perhaps an undertaking from the 3rd Defendant as to their safe custody.  On the contrary, no undertaking of this sort was forthcoming and the issue of the lien on the $5 million loan was now raised followed by the 1st Defendant’s demand for the repayment of the $2.18 million personal loan to Mr Poh.

45.  This attitude, where the parties had by now clearly fallen out, must have left Mr Poh in a state of considerable anxiety as to how he could legitimately secure the return of the Plaintiff’s certificates in the face of apparent hostility.  In my judgment it was, in these fraught circumstances, entirely reasonable of the Plaintiff’s advisers to opt to look to the court for redress and to do so urgently irrespective of whether in the event that there was little risk of the shares being mis-voted on 13 November or fraudulent transfers being made from the name of the Plaintiff to third parties hostile to Mr Poh’s and the Plaintiff’s interests.  It seems to me that an ex parte application was entirely reasonable in such circumstances.  As I already concluded, the application was correctly made to the duty judge who was given proper disclosure of all the material facts.

Conclusion

46.  In these circumstances, Mr Poon has not been able to show any valid reason to have the original injunction discharged.  This therefore triggers the issue of costs which is what this hearing has been all about.  I have heard provisional argument on costs in a case where there is no realistic prospect of this action coming to trial.  An order for costs between the parties should therefore be made now to be taxed and paid forthwith.

Costs

47.  Costs  therefore ought to follow the event paid by the Defendants to the Plaintiff and taxed on a party and party basis with certificate for two counsel.