DONALD QUINTIN CHEUNG v. WANG THE HUEI AND OTHERS

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JUDGMENT

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Fuad, J.A.:

1. This is an appeal from an interlocutory order made by Penlington, J. on 11 March this year, in a petition by Mr. Donald Cheung to wind up a company called Beta Estates Ltd., or alternatively for the relief provided for by s.168A of the Companies Ordinance. The matter which came before the judge on 11 March was a summons for directions and after hearing the parties, the learned judge issued various directions, most of which had been objected to by Mr. Sujanani who then appeared for the Respondents.

2. The directions he gave were that (1) the Respondents were to file affidavits in reply to the main affidavit filed by Mr. Cheung within 21 days; (2) the Petitioner should file affidavits in reply within 21 days of service of the affidavits; (3) the deponents of the affidavits be at liberty to attend the hearing of the petition for the purpose of supplementing their evidence by viva voce evidence; (4) the deponents of the affidavits should attend the hearing for the purpose of being cross-examined; (5) the witnesses to be called by the respective parties be limited to the persons who had filed affidavits, except by consent or with the leave of the Court; and there were further directions regarding (6) discovery and (7) inspection. The final direction (8) was that the date of the hearing of the petition should be fixed in consultation with counsel's diaries.

3. The Notice of Appeal complains that no directions beyond those that related to the filing of affidavit evidence should have been given because the evidence would show, when it was finally in, (that is to say the evidence which would be filed by the Respondents) that there was a dispute as to the ownership of the shares in the company held by the Petitioner, in that two of the Respondents claimed that those shares were held by the Petitioner on constructive trusts for them. There should have been no further directions because not until evidence was filed would the Court be in a position to consider, in the light of that evidence, whether the petition should be dismissed or adjourned, or what other directions might be appropriate in all the circumstances.

4. The Notice of Appeal suggests that to make directions beyond directions as to evidence before the Respondents' evidence had been filed "would be to rule against the directions" referred to regarding these matters, "without permitting the Respondents to file the evidence upon which an application for such directions would be based, and thereby to preclude a fair hearing of the application for such directions."

5. The Notice of Appeal goes on to say that the judge was wrong in making any directions for discovery until the evidence has been completed, the issues had thereby been determined, and the time limits for discovery could be considered in the light of the nature of those issues.

6. We have been provided with excellent notes, taken by the Petitioner's solicitors, of the submissions made by counsel before Penlington, J. on 11 March. After suggestions were made about time limits for the filing of affidavits which had been delayed, Mr. Sujanani for the Respondents, was asked by the judge whether he opposed the draft directions, and he said he opposed most of them. He mentioned the other four sets of proceedings which were pending and had been instituted by the Petitioner, and the judge then asked why the affidavits had not yet been filed. Mr. Sujanani replied that these other proceedings had necessitated: Points of claim and Defence to be filed; there had been directions in an Order 14 summons and other interlocutory matters. The judge then commented that communication could have taken place with London Counsel by telex which would have enabled the affidavits to be filed more quickly. Mr. Sujanani explained that the inter-connected proceedings did not help matters and he asked for 35 days in which to file the affidavits.

7. Mr. Sujanani also made an application that the affidavits in one of the sets of proceedings (the Receiver-ship Action) should stand as evidence in the present proceedings. The judge then enquired why such a short time had been asked for previously. Mr. Sujanani replied that at that time they had thought that 21 days would be sufficient. As to the draft directions, Mr. Sujanani again submitted that the Petitioner's alleged beneficial shareholding was strongly disputed and if it turned out that the beneficial owner of the shares was not the Petitioner, then he would have no right to present his petition; and that the winding-up petition was not the appropriate forum for determining a dispute of this kind.

8. Mr. Sujanani then specifically objected to paragraphs 3, 4, 5, 6 and 7 of the draft directions, saying that they were premature in view of the dispute as to the beneficial ownership of the shares and repeated the point that the winding-up petition was not the proper forum for determining issues of that kind. The Court then asked why should the directions not be given as requested. Mr. Sujanani repeated his objections and asked for time to file the affidavits; he again asked for 35 days pointing out that once the affidavits were filed the dispute would clearly emerge. In referring to particular directions, Mr. Sujanaji contended that some of the directions would turn out to be of no value, and he also made the suggestion that the petition should be adjourned.

9. The learned judge, as we have seen, gave the directions complained of. He did not, however, give any reasons for his decision, so we are handicapped - to the extent that this being an appeal against the exercise of his discretion, our task is made more difficult.

10. In pursuance of the judge's directions, a large number of affidavits have been filed since the hearing before him, and Mr. Wright, for the Respondents to the petition, asked for leave to read those affidavits before us so that he could show, inter alia, that there was a bona fide and substantial dispute about the beneficial ownership of the shares, so as to render the directions beyond the filing of evidence inappropriate. We came to the conclusion that the conditions precedent, set out in the R.S.C., to the admission of fresh evidence on appeal had not been satisfied and so we refused Mr. Wright's application.

11. Mr. Wright then asked us to consider whether we would grant an adjournment so that he might have an opportunity of making a formal application in the appropriate Court for a stay of the petition, in the light of the evidence that had now come to light. We thought it not right to postpone a decision in this appeal.

12. Speaking for myself, I am unable to say that the judge erred in the exercise of his discretion to give what I might call "full directions". It is not entirely clear what was in his mind, but from his interjections, it is plain that he was concerned about the delays that had ensued and was anxious that the petition should get on its feet without further delay. It seems to me that it would be wrong to interfere with the exercise of his discretion. The Appellant is free to apply for a stay as soon as he wishes and if a stay is granted, then, of course, all orders and directions made in the petition, including the summons for directions, would cease to have effect.

13. Mr. Wright had a difficult brief which he presented with courtesy and, if I may say so, ability, but he did not persuade me that this was a case in which this Court should interfere and so I would dismiss the appeal.

Barker, J.A.:

14. I agree. I am of the view that on the material properly before the learned judge, his decision cannot be faulted. I would, however, add one thing. As has been said by the Court of Appeal in a number of cases, it is important that a judge should give reasons for his decision. If he does not do so, neither the Court of Appeal nor the parties concerned are in a position to know exactly the reasoning behind his judgment. It is to be hoped that, in future, there will always be reasons given by judges in cases of this nature.

Kempster, J.A.:

15. The implications of the submissions made to Penlington, J. by Mr. Sujanani on behalf of the Appellants were that there were outstanding issues as to the beneficial ownership of the shares, which provided the locus standi of the Petitioner as a contributory, and further that such issues could better be determined in other extant proceedings. He, in terms, sought an adjournment, but it is now only too apparent that the Appellants should have moved the Court below to dismiss or stay the petition and have adduced appropriate evidence. That such evidence was not before the Court below is only too apparent from the terms of the Notice of Appeal which reads "..... the evidence to be filed by the Respondents will show that there was a relevant dispute as to the ownership of the shares." The term "Respondents" there means the Respondents to the petition, who are the Appellants before us.

16. Had the Appellants filed evidence and taken the course just mentioned, the learned judge would have had material upon which to exercise a discretion as to matters of substance. As it was, he was aware only that the Appellants had been singularly tardy in the filing of their evidence in opposition to the petition. In the circumstances, I agree with my Lords that the exercise of his discretion to order full directions (albeit his reasons were not given as they should have been thus compelling us to act on inference) cannot be faulted.

17. I, too, would dismiss the appeal and, in so doing, would emphasise a further point, namely, that a Notice of Appeal should indicate specifically what relief is sought from this Court.