SHUN YEE NATIVES ASSOCIATION (HONG KONG) LTD AND ANOTHER v. DENG JIE LING AND ANOTHER

HCMP 1119/2023

[2025] HKCFI 1732

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1119 OF 2023

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BETWEEN

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DECISION

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1.  There is before the Court a Summons filed by the Plaintiffs on 18 July 2023 (“Summons”) seeking interlocutory injunctive relief against the Defendants.

2.  On the day before this hearing, the 2^nd Plaintiff took out a “Reconstitution Summons” seeking, inter alia, to have (a) it struck out as plaintiff in these proceedings; (b) it added as the 3^rd Defendant; and (c) all proceedings herein against it be stayed until further order of the Court. The Order was sought upon the 2^nd Plaintiff’s undertaking to comply with any costs order to be made by the Court herein. The application was not opposed and an Order in terms of the Reinstitution Summons as amended was granted at the beginning of this hearing.

3.  The 1^st Plaintiff continues to press for relief under the Summons. However, the only order now sought by the 1^st Plaintiff is that under para 2 of the draft Order, namely, unless properly elected or appointed under the Articles of Association of the Company[1] (“Articles”), (a) each of the Defendants[2] be restrained from holding out and/or acting as a member of the Standing Board (常務會董), a member of the Board (會董) and/or a director of the Company; (b) the 1^st Defendant be restrained from holding out and/or acting as the Secretary-General (秘書長) of the Company; and (c) the 2^nd Defendant be restrained from holding out and/or acting as the Chairperson of the Standing Board (常務會董會主席) and/or the Chairperson of the Board (會董會主席).

4.  It is plain that this application is about the internal management of the Company and compliance with the Articles. The disputes here arose from the expiration of tenure for the members of the 9^th Term Board of Directors (“Board”) and Standing Board of Directors (“Standing Board”) of the Company. The latter came under the Board (each of its members was also a member of the Board) and was the management apparatus of the Company.

5.  The tenure of the 9^th Term Board and Standing Board expired on 30 April 2021. It was a time when Hong Kong was under the COVID-19 pandemic. Notwithstanding the evidential dispute on how the Board and Standing Board were elected for many years over the past (whether the Articles were strictly adhered to), there can be no serious dispute that the pandemic had adversely impacted upon the election of the 10^th Term Board and Standing Board.

6.  The evidence shows that following the expiration of tenure of the 9^th Term Board and Standing Board, members of the Board, including the Defendants and Mr Cheung Kwong Shing (“Cheung”), who was the president of the 1^st Plaintiff, embarked upon preparatory steps for the election of the 10^th Term Board and Standing Board.

7.  It appears that disagreement, at least between the Defendants and Cheung, came to a head when it was decided that the election was to take place on 23 July 2023. On 18 July 2023, the 1^st and 2^nd Plaintiffs took out an Originating Summons as well as the Summons seeking injunctive relief to stop the election on 23 July 2023 and to restrain the Defendants as referred to in para 3 above.

8.  The Summons was heard on 21 July 2023 before Deputy High Court Judge KC Chan, who declined the Plaintiffs’ application for an interim-interim injunction pending the substantive hearing of the Summons. However, the learned Deputy Judge gave directions, inter alia, for the substantive hearing to be fixed on an early date before any Judge. No doubt it was to reflect the urgency of the matters as presented by the Plaintiffs.

9.  The election of the 10^th Term Board and Standing Board proceeded as planned on 23 July 2023. They have since been managing the Company for the better part of two years.

10.  With this brief outline of the background to this application, it is quite surprising for the Court to learn that since the hearing on 21 July 2023 no effort was made by the 1^st Plaintiff to fix a hearing for this application until September 2024, 14 months after directions were made by the Deputy Judge. There is no explanation by the 1^st Plaintiff for this inordinate delay.

11.  Unsurprisingly, the first line of argument advanced by Mr Li SC, who appeared for the Defendants with Ms So, is the absence of irreparable damage and the delay in the prosecution of this application.

12.  On irreparable damage and delay, Mr Ng, who appeared with Mr Leung for the 1^st Plaintiff, does not dispute the principles referred to in Dorshare Ltd v Shun Pong Ltd, unrep., HCA 1823/2012, 4 January 2013, [12]-[16] :

(1) Unexplained inordinate delay can be fatal to an application for interlocutory injunction.

(2) First, delay reflects the lack of irreparable damage. There is a strong requirement that when interlocutory injunctions have been sought, the plaintiff must show it has acted promptly and without delay. If a party is prepared to allow matters to proceed and takes no action with respect to matters which have been extant for lengthy periods, it lies ill in their mouth to say that there is likely to be irreparable damage.

(3) Second, delay may cause prejudice to the person who will be affected by the injunction.

(4) Third, delay can render it unreasonable or unjust to grant the injunction.

(5) Fourth, a bad case of unexplained inordinate delay can constitute an abuse of process. It is a basic requirement for an interlocutory injunction application that the applicant must act with due expedition. It stands to reason that a serious failure in this regard can constitute an abuse of process.

13.  Mr Ng referred the Court to Sanju Environmental Protection (Hong Kong) Ltd v Wang Lishan [2023] 2 HKLRD 242, [42]-[45], and submitted that when exercising the jurisdiction under s.729 of the Companies Ordinance, Cap 622, the Court is not confined by the considerations which would be applicable if it was exercising its traditional equitable jurisdiction.

14.  I do not believe that this authority takes anything from the principles referred to in Dorshare or has rendered them less relevant for the present purpose. Further, as pointed out by Mr Li, Sanju was a case of final injunctions for which purpose the considerations are not identical to those for an interlocutory injunction.

15.  In respect of irreparable damage, Mr Ng relies on the alleged breaches of the Articles. Notwithstanding the 1^st Plaintiff’s criticisms on the election of the 10^th Term Board and Standing Board, on the evidence the process under which they were elected was open, and with Cheung’s participation.

16.  Further, with Cheung’s knowledge, those Boards have been managing the Company for the better part of two years. The only piece of evidence which may adversely impact upon the conduct of the Defendants in the running of the Company is an Audit Report of an audit exercise over the accounts of the Company for the years 2016 to 2022. There was no suggestion in the Report that either of the Defendants had made any monetary gain at the expense of the Company, although it was found that various Articles had been breached because adequate procedure had not been put in place for safeguarding the finance of the Company.

17.  It should be noted that Cheung was the Chairman of the Audit Committee which produced the Report, which suggests that the management of the Company was transparent. Moreover, as pointed out by Mr Li, the Company is not a financial or profit-making entity. Rather, it was a friendly association of people and associations from Maoming. Whilst the Court does not in any way condone any breach of the Articles, the conduct in question must be viewed in context.

18.  Importantly, there is no evidence that the Defendants continue to ignore the provisions of the Articles since their election for the 10^th Term. On balance, I am unable to accept that there is irreparable harm which may justify the imposition of an interlocutory injunction against the Defendants.

19.  On the contrary, it appears that granting an injunction is liable to cause disruption to the management of the Company. To begin with, based on the information about the 9^th Term Board, the 10^th Term Board may consist of nearly 200 members with about 57 of them also serve as members of the 10^th Term Standing Board (again based on the 9^th Term data). Mr Ng suggested that with an injunction against the Defendants, the ex officio Board members (including Cheung), who do not have a fixed term of tenure[3], may continue to run the Company. There are 5 such members who are the presidents of affiliated associations of the Company.

20.  However, it is not at all clear (a) whether the other 4 ex officio members are willing to shoulder the responsibility of running the Company; (b) what position will be adopted by the other Board members who are not subject to the injunction; and (c) whether conflict may arise between the ex officio members and the other Board members. The court is not assured by Mr Ng’s submission that an injunction granted against the Defendants would lend weight to the 1^st Plaintiff’s contention that the 10^th Term Board and Standing Board were not properly elected. An injunction granted against the Defendants should not be used in any way against a non-party.

21.  In these circumstances, I see no adequate justification to exercise the Court’s discretion to grant the interlocutory injunction. Accordingly, the Summons is dismissed with costs to the Defendants and a certificate for 2 counsel.

22.  The Court was invited by the Defendants to make summary assessment of (a) the costs in respect of the 1^st Plaintiff’s Summons filed on 15 April 2025 to adduce the 3^rd affirmation of Cheung, which was dismissed with costs at the beginning of the hearing; and (b) the costs of the Summons, including the costs of the hearing before Deputy Judge KC Chan which were reserved.

23.  In respect of (a), I see no sufficient justification for engaging senior counsel to deal with what was a relatively simple matter. Insofar as any additional work which might have been caused by the application for additional evidence to senior counsel briefed for the hearing, I am inclined to the view that, certainly on party and party basis, such additional work should be covered by the brief fee for the hearing. Mr Ng’s suggestion of HK$50,000 as the costs of this application is not unreasonable, and I agree with it.

24.  As regards (b), although the time costs under sections C and D of the Statement of Costs are very high bearing in mind the involvement of counsel from inception, there are merits in Mr Li’s submission that the nature of the Company and how its affairs were conducted over the years might have rendered it more time consuming for the solicitors to obtain instructions. On the other hand, the claimed total costs of nearly HK$1.1m are disproportionate. On a reasonably board brush basis, I assess the costs at HK$800,000.

25.  I am grateful to counsel for their assistance.