CHEUNG POH CHOO v. CHIN LAN HONG AND OTHERS

HCMP 4751/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4751 OF 2002

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D E C I S I O N

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The applications

1. I have before me a summons for striking out parts of the petition taken out by the 1st to 4th respondents in each of the nine petitions presented by the same petitioner under section 168A of the Companies Ordinance, Cap. 32. The same four individuals are named as the 1st to 4th respondents in each of the petitions. The 5th respondent in each instance is the company in respect of which the petition is presented. I shall refer to these nine companies in the same manner as they have been referred to in the petitions. They are as follows:

(1) Ka Ka Realty Limited ("Ka Ka"; HCMP No. 4751 of 2002)

(2) Lipoyuen Properties Limited ("Lipoyuen"; HCMP No. 4752 of 2002)

(3) Shinta Realty Limited ("Shinta"; HCMP No. 4753 of 2002)

(4) E. Tung Construction Company Limited ("E. Tung Construction"; HCMP No. 4755 of 2002)

(5) E. Fu Property Limited ("E. Fu Property"; HCMP No. 4757 of 2002)

(6) Da Lee Kai Property Management Limited ("Da Lee Kai"; HCMP No. 4758 of 2002)

(7) Dapoly Properties Limited ("Dapoly"; HCMP No. 4759 of 2002)

(8) E. Wah Construction Company Limited ("E. Wah Construction"; HCMP No. 4760 of 2002)

(9) Katong Realty Limited ("Katong"; HCMP No. 4762 of 2002).

2. The petitioner is a shareholder of each of the nine companies. The 1st to 4th respondents are directors in each of these companies.

3. The petition filed in each of the proceedings, seeking relief under section 168A only, follows the same format. These petitions contain either 120 or 121 paragraphs. Paragraphs 1 to 5 are formal matters relating to the company in question. Paragraphs 6 to 32, which are virtually identical in each petition save for the parts dealing with the respective positions of the petitioner and the 1st to 4th respondents in the company concerned, contain background matters common to each of the proceedings. From paragraph 33 onwards to the penultimate paragraph in each petition, there are set out the complaints upon which the allegation of unfairly prejudicial conduct of the affairs of the company concerned made in the concluding paragraph in each petition is founded.

4. The complaints set out in each of the petitions are identical. They are categorised under 13 heads. A summary of these complaints is given in the written submissions of Mr Tang, SC, who appeared with Mr Godfrey Lam, for the 1st to 4th respondents in this hearing. These complaints are as follows:

(1) the sale of certain properties by Dapoly to Fupoly Properties Limited at an undervalue;

(2) the making of loans by some companies in which the petitioner was a substantial shareholder to other companies in most of which the petitioner was not a shareholder or had a very small shareholding;

(3) the provision for bad and doubtful loans in the accounts of Lipoyuen to Starlight Estates Limited;

(4) the late payment and non-payment of dividends to the petitioner in respect of various companies in which she is a shareholder, including E. Wah Construction, E. Tung Construction and Ka Ka;

(5) the depletion of financial resources of various companies by the excessive and unreasonable expenditure incurred by or allowances made to the 1st to 4th respondents and their respective families;

(6) the diversion of resources of some companies in which the petitioner has substantial interests to those in which she has little or no interests through the charging of management fees and other expenses;

(7) the exclusion of the petitioner from management, in particular, the removal of the petitioner as director in 74 companies;

(8) the failure to notify the petitioner of general meetings and directors' meetings in respect of various companies including Shinta and Ka Ka and the making of false statements of the attendance of the petitioner in the minutes of board or general meetings of various companies including E. Wah Construction, Lipoyuen, E. Wah Enterprises Limited and Katong;

(9) the winding up of various companies of which the petitioner is a shareholder without her knowledge;

(10) the imposing of restrictions upon the petitioner's inspection of corporate documents in respect of various companies;

(11) the eviction of the petitioner from the family home at No. 4A South Bay Road, Repulse Bay, Hong Kong, which is owned by the 1st respondent, Hong Kong Riches Limited, Lovable Development Limited, Easifast Development Limited and the estate of Cheung Chin Chye as tenants in common;

(12) the cessation of payment of salary to the petitioner by Veristrong Company Limited ("Veristrong"); and

(13) the making of a false statement in the minutes of the general meeting of Katong that the shareholders including the petitioners had unanimously resolved to provide shareholders' loans in proportion to their shareholdings in the total sum of HK$3,500,000.00 when the petitioner had not done so and the making of an unjustified demand by Katong and the other shareholders against the petitioner to contribute to the shareholders' loans.

5. The argument advanced by Mr Tang in support of the application to strike out different parts in each of the nine petitions is a simple one. He submitted that even on a cursory reading of the complaints in the petitions, it is plain and obvious that the overwhelming majority of the complaints in each of the petitions relate exclusively to companies other than the company which is the subject of the petition. Hence, such complaints do not come within the ambit of section 168A at all and cannot possibly found relief in the respective petitions. The petitioners' approach of raising identical complaints in each petition notwithstanding that only a small number of these complaints relate to the affairs of the subject company is objectionable as disclosing no reasonable cause of action or is frivolous or vexatious or otherwise an abuse of the process of the court. Mr Tang seeks to strike out in each petition certain parts as set out in each summons under Order 18 rule 19 of the Rules of the High Court and the inherent jurisdiction so that only the complaints which can properly be said to relate to the affairs of the company concerned should remain.

The petitioner's contention

6. It is necessary to go into a bit more of the background to understand why the petitioner has chosen to raise identical complaints in each petition notwithstanding that a number of the complaints apparently do not relate to the affairs of the subject company in each of the proceedings.

7. The late Cheung Kung Hai ("the deceased"), who passed away on 2 October 2000, had one son and seven daughters, one of them being the petitioner, by his principal wife who passed away in 1977. The 1st respondent was the second wife of the deceased. They had three sons, being the 2nd, 3rd and 4th respondents, and three daughters. The 1st, 2nd and 3rd respondents are the executors of the deceased's estate. The deceased also had two adopted sons.

8. During his lifetime, the deceased had built up a substantial business in real estate development, construction, property investment and property management. As his business expanded over the years, many companies were incorporated or acquired to hold assets or to conduct particular development projects. These companies do not belong to a group with one holding company; some are within a "group of companies" as defined by section 2 of Cap. 32, some are subsidiaries of other companies as defined in section 2(4) of Cap. 32, and some do not belong to a group at all. The shareholdings in these companies vary. Even for companies with common shareholders, the respective percentage shareholdings in different companies may or may not be the same. Some of the family members of the deceased, including the petitioner, the 2nd, 3rd and 4th respondents and one of the adopted sons, have worked in the business started by the deceased.

9. In each of the petitions, it is stated that the 145 companies set out in Annex I to the petitions are collectively referred to as the "Cheung Family Companies" or "Cheung Family Group" and the business engaged in by these companies is called the "Cheung Family Business". However, it is not clearly stated in the petitions what is the basis upon which the companies are classified as the "Cheung Family Companies", assuming that the "Cheung Family", which is not defined, means the deceased, his wives, his children and grandchildren. It is only in the petitioner's 2nd affirmation, which is filed in opposition of these applications, that she has specified these three features as common to every company within the "Cheung Family Group":

(1) there is or was at least one shareholder within each company who is a member of the Cheung Family, or who has or had an interest (directly or indirectly through another company) in that company;

(2) control of the company (in the sense of the composition of the board of directors of each company) is vested in the hands of individuals who are members of the Cheung Family; and

(3) many of the companies were formed or acquired to undertake a particular project, business or enterprise, or to hold a particular asset belonging to, or arising from, the business activities of the Cheung Family.

10. Even though the classification of the "Cheung Family Companies" has been clarified to some extent, there is dispute if all the 145 companies should be so classified based on the common features as identified by the petitioner. The respondents have named a number of companies among the 145 companies that are joint venture companies in which the Cheung Family holds only 7.5% to 37.5% of the shareholding and one-third or less representation on the board of directors. There are also other joint venture companies in that list in which the Cheung Family holds 50% of the shareholding and which are therefore not controlled by them. Further, the petitioner has not included in that list any company which she herself owns or controls which would, on her criteria, be within the "Cheung Family Group". The classification is problematic to say the least.

11. The petitioner's reasons for raising identical complaints are encapsulated in the following paragraph numbered as 32 or 31 in each of the petitions:

"In what follows, your Petitioner will set out her grounds of complaint against the Respondents. The complaints relate to [the subject company] as well as other members of the Cheung Family Group. Your Petitioner verily believes that the complaints relating to [the subject company] should not be viewed in isolation because those complaints form part and parcel of a continuous course of conduct engaged by the 1st to 4th Respondents against your Petitioner's interests in the Cheung Family Companies. As a matter of fact, [the subject company] shares the same office and staff as the Cheung Family Companies. Consequently, the significance of the complaints in relation to [the subject company] can only be properly assessed having regard to the overall context of your Petitioner's complaints relating to the way in which the affairs of the Cheung Family Companies have generally been conducted by the 1st to 4th Respondents against her interests."

12. Mr Alfred Chan, who appeared for the petitioner, expanded on the above reasons at the hearing. It was submitted that there is nexus between the subject company in each petition with the "Cheung Family Companies", even though they are not companies within a group. The "Cheung Family Group" should be looked at as a single business structure, as the affairs of the "Cheung Family Companies" are intertwined. By way of an example, the petitioner has pointed to fact that her salary was paid by different companies over different periods even though she was not a director of some of them. The conduct complained of is a continuous and systematic course of conduct over a period of more than ten years, and undertaken with the intention of undermining the petitioner's interests in various companies in the "Cheung Family Group". For example, 64 notices calling for the termination of her directorship in 64 companies were issued on the same day; a memorandum was issued to the directors of 114 companies imposing restrictions to have access to company records and files; the letter of Veristrong raising the issue if the petitioner's salary payment should be stopped was dated the same date as the notice requiring her to vacate the family home. It would be misleading to view her complaints as unconnected events. For the court to assess properly the significance and impact of the conduct of the 1st to 4th respondents in respect of the petitioner's interest in any one of the subject companies, it is necessary to take into account all instances of unfairly prejudicial conduct alleged against these respondents in the affairs of the "Cheung Family Group", irrespective of whether they are the affairs of the subject company.

Requirements for relief under section 168A

13. It is pertinent to bear in mind that these are petitions presented under section 168A alone and it is incumbent on the petitioner to bring her case within the terms of that provision for statutory relief to be granted. The relevant part of section 168A reads as follows:

"(1) Any member of a company who complains that the affairs of the company are being or have been conducted in a manner unfairly prejudicial to the interests of the members generally or of some part of the members (including himself) or, in a case falling within section 147(2)(b), the Financial Secretary, may make an application to the court by petition for an order under this section." (emphasis supplied)

14. The meaning of conduct in "the affairs of the company" has been considered in a number of authorities. Mr Tang relies in particular on two decisions of Harman J in Re a Company (No. 001761 of 1986) [1987] BCLC 141 and Re Unisoft Group Ltd (No. 3) [1994] 1 BCLC 609. Both decisions were given on applications to strike out a petition or a pleading served there under presented under section 459 of the Companies Act 1985, which is similar to our section 168A.

15. In Re a Company, Harman J had this to say on the jurisdiction under section 459 at 143g to h:

"Thus the s 459 jurisdiction is considerably wider than the s 210 [of the Companies Act 1948] jurisdiction was. However, it is still a statutory remedy in order to obtain which it must be shown that prima facie there are grounds from which the court would hold that the tests in the section are satisfied before it is properly presented. It is of great importance to notice that, under s 459, as under s 210, it is still necessary to show that the affairs of the company, that is, the company in respect of which the petition itself is presented, which are being conducted; or that the act or omission is an act or omission of the company itself. That was also the case under s 210 and was the basis for an important distinction which counsel for the respondent ... clearly brought to my notice by analysis of Scottish Co-operative Wholesale Society Ltd v. Meyer [1959] AC 324."

16. In Scottish Co-operative, a distinction was drawn between two sets of conduct: the acts of the majority shareholder in diverting contracts to itself from the company, and the omission of the three directors nominated to the board of the company by the majority shareholder in failing to take action to defend the company's interest in that situation. The first was conduct by the majority shareholder of its own affairs, and although adverse to the interest of the company would not have founded relief under section 210 as that was not conduct in the course of the company's business. The second was conduct in the affairs of the company and would be relevant conduct for section 210.

17. Harman J continued at 144e to h as follows:

"Thus one must always analyse very carefully, both under s 210 and under s 459, what is the conduct in the company itself or by the company itself (whether it be a single act or whether it be a course of conduct matters not) to see that there was conduct in the company's own affairs. ...

All these cases together, in my judgment, lead one clearly to the understanding that the conduct to be complained of must be in the affairs of the very company in respect of which the petition is presented." (emphasis supplied)

18. He ordered the petition to be struck out, one of the reasons being that the allegations of unfairly prejudicial conduct were acts of a shareholder acting in her personal interest and were not conduct of or in the company's affairs.

19. In Unisoft, Harman J ordered to be struck out large parts of an amended points of claim directed to be served under a petition on the grounds that they either disclosed no cause of action as the conduct alleged was not conduct of the affairs of the company or did not affect the petitioner qua member. The relevant parts of his judgment read as follows:

"Those words [in section 459, that 'the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members (including at least himself)'] are, on the face of them, extraordinarily wide and general. They allow, on the face of them, every sort and kind of conduct which has taken place over an almost unlimited - uncertainly upwards of 20 years - period of time in the management of a company's business to be dug up and gone over. The words are, however, limited by reference to 'the company's affairs' in respect of which the conduct must be alleged.

... But wide as the category of acts may be it is necessary that the act or omission is done or left undone by the company itself or on its behalf. ... The acts of the members themselves are not acts of the company nor are they part of the conduct of the affairs of the company and cannot found a petition under s 459.

Petitions under s 459 have become notorious to the judges of this court - and I think also to the Bar - for their length, their unpredictability of management, and the enormous and appalling costs which are incurred upon them particularly by reason of the volume of documents liable to be produced. ... In those circumstances it befits the court, in my view, to be extremely careful to ensure that oppression is not caused to parties, respondents to such petitions or, indeed, petitioners upon such petitions, by allowing the parties to trawl through facts which have given rise to grievances but which are not relevant conduct within even the very wide words of the section.

The section requires these to have been conduct of 'the company's' affairs, or an act or omission by 'the company', so one has to look and see that the activity complained of is an activity in the course of conduct of the company's affairs or is by the company, so that the petitioner can show that the affairs have been conducted in a manner prejudicial to the interests of the members." (at 611a to g; emphasis supplied)

20. At 622i to 623e, the judge again emphasised the distinction drawn between the acts of the shareholder in his private capacity and the acts of the company:

"It is important to remember that shareholders' rights to deal with or vote their shares are separate from the rights of the company as a corporate entity and shareholders' relationships with it. Shareholders are entitled to sell their shares, to vote their shares, to take any course they like in general meeting without regard to any other person's rights or position. ...

In my judgment, it is vitally important to hold that shareholders' disputes concerning dealings with their shares are not the same as unfair conduct of the company's business. Shareholders must be kept distinct from the company so far as their private position as shareholders is concerned.

It is of course obvious that a company may act or conduct itself in a manner affecting a shareholder's rights in respect of his shares, for example the board may refuse to sanction a transfer of shares for improper reasons. The action of the board is conduct of the affairs of the company and so, if damage is alleged, may raise the ground of 'unfair' prejudice, and a petition under s 459 may be presented to the court. Further, a shareholder by exercising his own private right to vote his shares may cause the company to act, by the passing of some resolution in general meeting, in a matter alleged to be unfairly prejudicial to some members. Again it is not the act of the shareholder in voting that will found a petition but the results of that act if it produces action, or inaction, by the company. In my judgment the vital distinction between acts or conduct of the company and acts or conduct of the shareholder in his private capacity must be kept clear. The first type of act will found a petition under s 459; the second type of act will not.

It is only when a shareholder is affected qua member of the company by the company's action which causes damage that s 459 comes into operation. There is a clear and important distinction, in my judgment, to be drawn between actions by shareholders affecting other shareholders directly and actions by the company affecting shareholders. ..." (emphasis supplied)

21. Re Legal Costs Negotiators Ltd [1999] 2 BCLC 171, also a decision on an application to strike out a petition under section 459, contained similar statements about the meaning of conduct in the company's affairs at 181h to 183b, 196b to c.

22. Mr Tang further submitted that even if the conduct complained of had related to the affairs of a subsidiary, in order to found relief under section 168A in respect of the parent company, there must be pleaded some conduct of the parent company which gave rise to the affairs of the subsidiary. In support of this, he cited Re Norvabron Pty. Ltd (1986) 11 ACLR 33, a decision of the Supreme Court of Queensland. In that case, objection was taken to a statement of claim seeking relief under inter alia section 320 of the Companies (Qld) Code, which provided the statutory basis for relief against oppression in the affairs of a company. In upholding the objection that the statement of claim was defective in that the matters alleged constituted conduct of the affairs of the subsidiary but not of the parent company being the subject of the proceedings, Macrossan J said at 36 as follows:

" ... if a case is to be made of oppressive inactivity within the affairs of the company it cannot be effectively pleaded solely by a statement, however extended, of activities in the affairs of the subsidiaries. It requires as well to be accompanied by a statement of activity in the affairs of [the parent company] (or it seems that a correlative 'inactivity' may be relied on) because this is the basis for relief in the jurisdiction concerned with oppression."

23. I should mention that in each of the nine petitions, most of the companies whose affairs are the subject of complaints in the parts sought to be struck out by the respondents are not subsidiaries of the company being the subject of the petition.

24. Mr Chan has not disputed the correctness of any of the above authorities cited by Mr Tang. I am satisfied that I should apply the law as decided in those cases. In my judgment, the correct approach is as follows:

(1) To found a petition under section 168A, the conduct to be complained of must be conduct in the subject company's own affairs.

(2) The companies being the subject of each of the nine petitions are separate corporate entities and must be kept distinct in a petition under section 168A, even though the petitioner has classified them as among the "Cheung Family Companies" or within the "Cheung Family Group". The operations and affairs of each of them must be analysed carefully to see if they would support the averment in the concluding paragraph of each petition that the affairs of that particular company have been, or are being, conducted in a manner unfairly prejudicial to the interests of the petitioner as a member of that company.

(3) If it is plain and obvious that the complaints cannot on any view support the averment in the concluding paragraph of each of the petitions, the complaints should be struck out. It is necessary that the act or omission complained of is done or left undone by the subject company or on its behalf. It is also a must that the act or omission complained of has affected the interests of some or all of the shareholders qua members of the subject company.

(4) Acts or omissions complained of in relation to the conduct of affairs of other companies affecting the interests of shareholders qua members of other companies should only be considered in the context of the relevant petition presented in respect of each of such other companies. Unless the acts or omissions of other companies are interactions with the subject company, they should have no place in the determination of unfairly prejudicial conduct in the affairs of the subject company.

25. Mr Chan has cited one authority in support of his proposition that it would be proper to look at the affairs of another company in determining if there is unfairly prejudicial conduct of the affairs of a different company, if those affairs are relevant and necessary for the proper determination of the issue. This is Jesner v. Jarrad Properties Ltd [1993] BCLC 307. In that case, the Court of Session in Scotland upheld the decision at first instance that there was no fairly prejudicial conduct under section 459 of the Companies Act 1985. Among the matters complained of were the loans made by the subject company to another company owned by the same individuals who were members of the same family and the granting of security by the subject company to a bank to secure the overdraft of the other company. It was held that in deciding whether these complaints of unfairly prejudicial conduct in the affairs of the subject company were established, it was necessary and proper to look at the whole background and history of lending between the two companies. There, the two companies had been run together as in effect one business, without regard to the formalities of the provisions of company law, and in what the directors perceived to be in the best interests of the family who comprised the membership of both companies.

26. Mr Tang submitted that the fact situation in Jesner is very different from what we are concerned with. I agree. In Jesner, there was a history of dealings between the two companies. The acts complained of as constituting unfairly prejudicial conduct in respect of the subject company involved interactions between the two companies. In that situation, it was necessary and relevant to look into the relationship and past dealings between the lender and the borrower. It is not an authority for the proposition that the court can and should look at other transactions not involving the subject company in deciding whether the lending transaction complained of involving the subject company would constitute unfairly prejudicial conduct.

27. Assuming, for the purpose of the present applications, that the subject companies in the nine petitions share the same office and staff as other companies in the "Cheung Family Group" as alleged in the petitions, and the affairs of the "Cheung Family Companies" are "deeply intertwined" as alleged in the petitioner's second affirmation, that is not a valid basis for taking into consideration complaints made in the conduct of affairs of other companies when they do not involve or impinge on the affairs of the subject company in any way.

28. With that, I turn to consider each of the complaints made in the petitions which the respondents seek to strike out. As the complaints set out in the nine petitions are identical, I will not refer to each petition separately. Whether a specific complaint should be struck out will of course be considered separately in respect of each petition. I will follow the same order for the 13 complaints as mentioned earlier.

Undervalue sales

29. The petitioner alleges there were two sales of properties at an undervalue by Dapoly to Fupoly Properties Limited, and her interest as a shareholder of Dapoly was thereby prejudiced.

30. There is no basis upon which such conduct of the affairs of Dapoly can be regarded as conduct of the affairs of Ka Ka, Lipoyuen, Shinta, E. Tung Construction, E. Fu Property, Da Lee Kai, E. Wah Construction or Katong. Dapoly is not a subsidiary of any of these eight companies. None of them have any direct or indirect interest in the shareholders of Dapoly. Nor can it be said that the petitioner's interest as a shareholder in any of the eight companies was affected or prejudiced by the alleged conduct.

31. I order to be struck out paragraphs 33 to 41 in each of the petitions in these proceedings: HCMP Nos. 4751 of 2002, 4752 of 2002, 4753 of 2002, 4755 of 2002, 4757 of 2002, 4758 of 2002, 4760 of 2002 and 4762 of 2002.

32. The respondents have not sought to strike out the allegations in HCMP No. 4759 of 2002 as this is the petition brought in respect of Dapoly.

Unsecured and interest free loans

33. It is alleged that unsecured loans were made by six companies in which the petitioner is a substantial shareholder to other companies, in most of which the petitioner was either not a shareholder or had a very small shareholding. In many instances, the loans were interest free. It is alleged that the petitioner's interest in the lending companies was unfairly prejudiced by such conduct. The six lending companies are as follows:

(1) Da Kee Kai

(2) E. Tung Construction

(3) Ka Ka

(4) Lipoyuen

(5) E. Fu Property

(6) Polta Plumbing & Electrical Engineering Company Limited ("Polta").

34. Polta is not the subject of any petition. None of the lending companies are subsidiaries of any of the others, nor do they have any direct or indirect interest in the shareholders of the others. The conduct of other lending companies cannot be said to constitute conduct of the affairs of a different company, irrespective of whether this is a lending company or not. It cannot be said that the petitioner's interest in a subject company was affected or prejudiced by such conduct in the affairs of other companies.

35. I order to be struck out the following parts in each of the petitions:

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraphs 42 to 46 to the extent that they are not related to the affairs of Ka Ka; Annexes (V)(a), (b), (d), (e) & (f)
HCMP No. 4752 of 2002	Paragraphs 42 to 46 to the extent that they are not related to the affairs of Lipoyuen; Annexes (V)(a), (b), (c), (e) & (f)
HCMP No. 4753 of 2002	Paragraphs 42 to 46; The entire Annex (V)
HCMP No. 4755 of 2002	Paragraphs 42 to 46 to the extent that they are not related to the affairs of E. Tung Construction; Annexes (V)(a), (c), (d), (e) & (f)
HCMP No. 4757 of 2002	Paragraphs 42 to 46 to the extent that they are not related to the affairs of E. Fu Property; Annexes (V)(a), (b), (c), (d) & (f)
HCMP No. 4758 of 2002	Paragraphs 42 to 46 to the extent that they are not related to the affairs of Da Lee Kai; Annexes (V)(b), (c), (d), (e) & (f)
HCMP No. 4759 of 2002	Paragraphs 41 to 45; The entire Annex (V)
HCMP No. 4760 of 2002	Paragraphs 42 to 46; The entire Annex (V)
HCMP No. 4762 of 2002	Paragraphs 42 to 46; The entire Annex (V)

Provision for bad debts and doubtful loans

36. The allegation here is that in the accounts of Lipoyuen, provision was made for bad and doubtful loans to Starlight Estates Limited.

37. There is no basis upon which such conduct in the affairs of Lipoyuen can be said to constitute conduct of the affairs of any of the other subject companies. Nor can it be said the petitioner's interest as shareholder in a different subject company was affected or prejudiced by such conduct.

38. I order to be struck out the following parts in each of the petitions:

(1) paragraphs 47 to 49 in HCMP Nos. 4751 of 2002, 4753 of 2002, 4755 of 2002, 4757 of 2002, 4758 of 2002, 4760 of 2002 and 4762 of 2002;

(2) paragraphs 46 to 48 in HCMP No. 4759 of 2002.

39. The respondents did not seek to strike out the allegations in HCMP No. 4752 of 2002, as that is the petition presented in respect of Lipoyuen.

Late payment of dividends

40. The petitioner complains that dividends declared by E. Wah Construction, E. Tung Construction and Ka Ka were not paid to her immediately upon declaration and that a portion of the dividends declared by Ka Ka remains outstanding. In addition, in 1999 no dividend had been declared by E. Wah Construction, E. Tung Construction, Lipoyuen, E. Fu Property, Ka Ka and Katong.

41. Only the allegation in relation to Ka Ka is relevant for the purpose of the petition brought in respect of Ka Ka. The same consideration applies in respect of the other subject companies. There is no basis on which the alleged late payment of dividends by a different company can be said to constitute conduct of the affairs of another company. Further, the petitioner's interest as shareholder in a subject company was not affected or prejudiced by such conduct in the affairs of other companies.

42. I order to be struck out the following parts in each of the petitions:

 

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of Ka Ka
HCMP No. 4752 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of Lipoyuen
HCMP No. 4753 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of Shinta
HCMP No. 4755 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of E. Tung Construction
HCMP No. 4757 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of E. Fu Property
HCMP No. 4758 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of Da Lee Kai
HCMP No. 4759 of 2002	Paragraphs 49 to 51 to the extent that they are not related to the affairs of Dapoly
HCMP No. 4760 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of E. Wah Construction
HCMP No. 4762 of 2002	Paragraphs 50 to 52 to the extent that they are not related to the affairs of Katong

Abuse of companies' resources for personal use

43. The petitioner complains that the resources of these six companies have been utilised by the respondents or their families:

(1) Veristrong

(2) E. Wah Construction

(3) Da Lee Kai

(4) Wah Ha Enterprises Limited

(5) E. Wah Realty Limited ("E. Wah Realty")

(6) Wah Sing Property Management Limited ("Wah Sing").

44. No petition has been presented by the petitioner in respect of the last three companies despite her complaints of the affairs of these companies of which she is a shareholder. She is not a shareholder of Veristrong. E. Tung Construction has a beneficial interest of 0.7% in Veristrong. E. Wah Construction has direct or indirect shareholdings of 54.34% in Veristrong and 99.995% in Wah Sing.

45. Similar considerations apply. I order to be struck out in each of the petitions the following parts which are irrelevant to the conduct of the affairs of the subject company:

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of Ka Ka
HCMP No. 4752 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of Lipoyuen
HCMP No. 4753 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of Shinta
HCMP No. 4755 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of E. Tung Construction
HCMP No. 4757 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of E. Fu Property
HCMP No. 4758 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of Da Lee Kai
HCMP No. 4759 of 2002	Paragraphs 52 to 59 to the extent that they are not related to the affairs of Dapoly
HCMP No. 4760 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of E. Wah Construction
HCMP No. 4762 of 2002	Paragraphs 53 to 60 to the extent that they are not related to the affairs of Katong

Diversion of company resources through management fees

46. The complaint is that resources of the following companies in which the petitioner has substantial shareholdings have been diverted to other companies in which she has little or no interest:

(1) Da Lee Kai

(2) E. Fu Property

(3) Ka Ka

(4) Katong

(5) Polta

(6) Shinta

47. Applying the same considerations, I order to be struck out the following parts in each of the petitions that do not relate to the conduct of affairs of the subject companies:

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraph 61 to the extent that it is not related to the affairs of Ka Ka; Annexes (VI)(a), (b), (d), (e) & (f)
HCMP No. 4752 of 2002	Paragraph 61; The entire Annex (VI)
HCMP No. 4753 of 2002	Paragraph 61 to the extent that it is not related to the affairs of Shinta; Annexes (VI)(a), (b), (c), (d) & (e)
HCMP No. 4755 of 2002	Paragraph 61; The entire Annex (VI)
HCMP No. 4757 of 2002	Paragraph 61 to the extent that it is not related to the affairs of E. Fu Property; Annexes (VI)(a), (c), (d), (e) & (f)
HCMP No. 4758 of 2002	Paragraph 61 to the extent that it is not related to the affairs of Da Lee Kai; Annexes (VI)(b), (c), (d), (e) & (f)
HCMP No. 4759 of 2002	Paragraph 60; The entire Annex (VI)
HCMP No. 4760 of 2002	Paragraph 61; The entire Annex (VI)
HCMP No. 4762 of 2002	Paragraph 61; Annexes (VI)(a), (b), (c), (e) & (f)

Exclusion from management of the "Cheung Family Companies"

48. The petitioner complains that she has in effect been removed as a director in 74 of the "Cheung Family Companies" as a result of not being re-elected to the board of directors of 58 companies and the de-registration of 16 companies.

49. The respondents do not seek to strike out the paragraphs in each of the petitions giving the background matters leading to this particular complaint, including the allegation of an earlier attempt of the respondents to remove the petitioner from the directorship of 64 companies by serving on her 64 notices for holding extraordinary general meetings for each of these companies. They only object to a specific paragraph in each of the petitions in which it is alleged that the petitioner was effectively removed as director in respect of companies other than the subject company or companies in respect of which the subject company has no direct or indirect shareholdings. Where the subject company has direct or indirect interest in any of the 74 companies, as in the case of E. Tung Construction and E. Wah Construction, the respondents do not take objection to the allegation of removal as director of these related companies.

50. I order to be struck out the following parts in each of the petitions insofar as these allegations do not relate to the affairs of the subject companies:

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of Ka Ka
HCMP No. 4752 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of Lipoyuen
HCMP No. 4753 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of Shinta
HCMP No. 4755 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of E. Tung Construction
HCMP No. 4757 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of E. Fu Property
HCMP No. 4758 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of Da Lee Kai
HCMP No. 4759 of 2002	Paragraph 72 and its reference to Annex (III) to the extent that they are not related to the affairs of Dapoly
HCMP No. 4760 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of E. Wah Construction
HCMP No. 4762 of 2002	Paragraph 73 and its reference to Annex (III) to the extent that they are not related to the affairs of Katong

Lack of notice of general meetings and directors' meetings

51. The petitioner complains that she was not given notices of board meetings and general meetings of various companies despite being a shareholder and/or director and it was falsely stated in the minutes of meetings of some of the companies that she was present when she was not. The companies being the subject of these allegations are:

(1) Shinta

(2) Ka Ka

(3) E. Wah Construction

(4) E. Wah Enterprises Limited

(5) Katong

(6) Lipoyuen.

52. I order to be struck out the following parts in each of the petitions as the allegations do not relate to the conduct of affairs of the subject companies:

 

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraph 75 and Annex (VIII) to the extent that they are not related to the affairs of Ka Ka; The entire Annex (IX)
HCMP No. 4752 of 2002	Paragraph 74 and Annex (IX) to the extent that they are not related to the affairs of Lipoyuen; The entire Annex (VIII)
HCMP No. 4753 of 2002	Paragraph 75 and Annex (VIII) to the extent that they are not related to the affairs of Shinta; The entire Annex (IX)
HCMP No. 4755 of 2002	Paragraph 74 to the extent that it is not related to the affairs of E. Tung Construction; The entire Annexes (VIII) and (IX)
HCMP No. 4757 of 2002	Paragraph 75 to the extent that it is not related to the affairs of E. Fu Property; The entire Annexes (VIII) and (IX)
HCMP No. 4758 of 2002	Paragraph 74 to the extent that it is not related to the affairs of Da Lee Kai; The entire Annexes (VIII) and (IX)
HCMP No. 4759 of 2002	Paragraph 74 to the extent that it is not related to the affairs of Dapoly; The entire Annexes (VIII) and (IX)
HCMP No. 4760 of 2002	Paragraph 74 and Annex (IX) to the extent that they are not related to the affairs of E. Wah Construction; The entire Annex (VIII)
HCMP No. 4762 of 2002	Paragraph 75 and Annex (IX) to the extent that they are not related to the affairs of Katong; The entire Annex (VIII)

Winding up of companies without the petitioner's knowledge

53. The petitioner complains that eight companies have been wound up without her knowledge despite the fact that she was a director and/or shareholder of these companies.

54. The companies wound up are not subsidiaries of any of the subject companies, nor do any of the subject companies have any direct or indirect interest in the shareholders of these companies which were wound up. Further, in respect of two of the eight companies, Chi Kong Realty Limited and Sun Fat Enterprises Limited, the petitioner is not even a shareholder and has no locus to make any complaint in the affairs of these companies.

55. I order these parts to be struck out in each of the petitions:

(1) paragraphs 77 to 81 and Annex (X) in HCMP Nos. 4751 of 2002, 4753 of 2002, 4757 of 2002, 4762 of 2002;

(2) paragraphs 76 to 80 and Annex (X) in HCMP Nos. 4752 of 2002, 4755 of 2002, 4758 of 2002, 4759 of 2002, 4760 of 2002.

Restriction imposed on inspection of company documents

56. It is alleged that restrictions were imposed on the petitioner on her inspection of corporate documents of these companies:

(1) Da Lee Kai

(2) E. Wah Construction

(3) E. Tung Construction

(4) Ka Ka

(5) E. Ting Realty Limited

(6) Shinta

(7) Da Lee Kai

(8) Wah Sing

(9) Katong.

57. The respondents do not seek to strike out the background matters in relation to this allegation. They only object to the parts relating to specific requests of documents in relation to companies other than a particular subject company and companies which are not subsidiaries of that subject company or in which the subject company has no direct or indirect interest in their shareholders.

58. I order to be struck out the following parts in each of the petitions as they are of no relevance to the conduct of affairs of the subject companies:

 

Action number	Parts struck out
HCMP No. 4751 of 2002	Paragraphs 88 to 93 to the extent that they are not related to the affairs of Ka Ka
HCMP No. 4752 of 2002	Paragraphs 87 to 92
HCMP No. 4753 of 2002	Paragraphs 88 to 93 to the extent that they are not related to the affairs of Shinta
HCMP No. 4755 of 2002	Paragraphs 87 to 92 to the extent that they are not related to the affairs of E. Tung Construction
HCMP No. 4757 of 2002	Paragraphs 88 to 93
HCMP No. 4758 of 2002	Paragraphs 90 to 92 to the extent that they are not related to the affairs of Da Lee Kai
HCMP No. 4759 of 2002	Paragraphs 87 to 92
HCMP No. 4760 of 2002	Paragraphs 87 to 92 to the extent that they are not related to the affairs of E. Wah Construction
HCMP No. 4762 of 2002	Paragraphs 88 to 93 to the extent that they are not related to the affairs of Katong

Eviction of the petitioner from the family home

59. The petitioner alleges that the legal proceedings being HCA No. 1208 of 2000 brought by the co-owners of the family home (except for the estate of Cheung Chin Chye) against her to evict her are wrongful as she has a right to remain in accordance with the family understanding and Chinese tradition. It is further alleged that she was provided the use of a room and facilities at the family home as part of her remuneration and package of benefits as an executive of the "Cheung Family Business" and a director of some of the "Cheung Family Companies". The petitioner alleges that the legal action brought by the co-owners was a way of putting pressure on her not to raise further questions regarding the respondents' conduct of the affairs of the "Cheung Family Companies" and excluding the petitioner from the Cheung Family.

60. The co-owners against whom the allegations are made are:

(1) the 1st respondent, Chin Lan Hong

(2) Hong Kong Riches Limited

(3) Lovable Development Limited

(4) Easifast Development Limited.

61. It is alleged that Hong Kong Riches Limited is owned or controlled by the 3rd respondent, Cheung Lin Wee, Lovable Development Limited is owned or controlled by the 2nd respondent, Cheung Kee Wee, and Easifast Development Limited is owned or controlled by the deceased's estate. Easifast Development Limited is not among the 145 companies classified as the "Cheung Family Companies" in Annex I to the petitions, although there is a company known as Easifast Company Limited included in Annex I.

62. The acts of the 1st to 3rd respondents in causing steps to be taken to evict the petitioner from the family home were not acts in their capacity as directors or otherwise on behalf of any of the subject companies in each of the petitions. These acts cannot be said to constitute conduct of the affairs of any of the subject companies. Nor was the petitioner's interest as shareholder in any of the subject companies affected or prejudiced by such conduct.

63. I order to be struck out from each of the petitions the following parts:

(1) paragraphs 94 to 105 in HCMP Nos. 4751 of 2002, 4753 of 2002, 4757 of 2002, 4762 of 2002;

(2) paragraphs 93 to 104 in HCMP Nos. 4752 of 2002, 4755 of 2002, 4758 of 2002, 4759 of 2002, 4760 of 2002.

Cessation of payment of salary

64. It is alleged that the petitioner had been receiving salary and reimbursement of reasonable personal expenses from different companies in the "Cheung Family Companies" at various times. Since 1990, payment was made to her by Veristrong. Veristrong has ceased to make payment as from 14 January 2000 and the board of directors of E. Wah Realty refused the petitioner's request to them to discuss her salary and benefits at the board meeting on 3 April 2000. It is alleged that the cessation of salary payment was a way of putting pressure on the petitioner by the 1st to 4th respondents not to raise questions regarding their conduct of the affairs of the "Cheung Family Companies" and excluding the petitioner from the "Cheung Family Business".

65. As mentioned earlier, the petitioner is not a shareholder of Veristrong and has no locus to complain of the conduct of the affairs of Veristrong. No service or employment agreement with the petitioner is alleged in respect of any of the subject companies. Nor is there any allegation of existing or past obligation of any of the subject companies to make salary payments to the petitioner, with the exception of E. Wah Construction and E. Tung Construction. E. Tung Construction and E. Wah Construction hold interests in Veristrong but not E. Wah Realty. Veristrong and E. Wah Realty are not subsidiaries of any of the other subject companies, nor are any of the other subject companies directly or indirectly interested in the shareholders of Veristrong or E. Wah Realty.

66. I order to be struck out the following paragraphs in each of the petitions:

(1) paragraphs 106 to 113 in HCMP Nos. 4751 of 2002, 4753 of 2002, 4757 of 2002, 4762 of 2002;

(2) paragraphs 105 to 112 in HCMP Nos. 4752 of 2002, 4758 of 2002, 4759 of 2002;

(3) paragraph 111 in HCMP Nos. 4755 of 2002, 4760 of 2002.

Alleged shareholders' agreement to lend money to Katong

67. The petitioner complains that the minutes of the extraordinary general meeting of Katong held on 28 September 2001 had falsely recorded that all the shareholders, including the petitioner, had resolved that they were to make a shareholders' loan to Katong of HK$3,500,000.00 in proportion to their existing shareholdings to meet the expenses for renovation works when she had in fact abstained from voting. Further, on the basis of the false minutes, Katong made an unjustified demand on the petitioner for a loan of HK$700,000.00 and threatened to bring legal proceedings if she should fail to comply.

68. The above allegation cannot be said to be conduct in the affairs of any of the subject companies other than Katong and should be struck out from the petitions of the other subject companies.

69. The paragraphs I order to be struck out in the eight petitions are as follows:

(1) paragraphs 114 to 120 in HCMP Nos. 4751 of 2002, 4753 of 2002, 4757 of 2002;

(2) paragraphs 113 to 119 in HCMP Nos. 4752 of 2002, 4755 of 2002, 4758 of 2002, 4759 of 2002, 4760 of 2002.

Further orders

70. In respect of each of the nine petitions, I further order the petitioner to file and serve an amended petition with the various parts struck out as ordered above within 21 days of the handing down of this decision.

71. I make an order nisi in each proceeding that the petitioner is to pay the costs of the 1st to 4th respondents of this application in any event, including the costs reserved in the order dated 18 February 2003, with a certificate for two counsel in respect of the hearing before me.