CHEN YU CHEN AND ANOTHER v. CHEUNG KA YEE AND OTHERS

HCCW 56/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 56 OF 2007

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D E C I S I O N

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1.  I have before me a petition presented on 28 January 1997 by two shareholders of Saint’s Alp (International) Company Limited (“the Company”).  These two shareholders are from Taiwan.  The four respondents in the petition are shareholders in Hong Kong.  The two petitioners with the husband of the 1^st petitioner together hold 49% of the issued shares in the Company.  It was alleged in the petition that there was a quasi-partnership and there was unfair and unjustifiable exclusion of the petitioners from the management of the Company in 1995, and that the respondents had seized control.

2.  In the prayer for relief, the petitioners seek an order that the Company is to be wound up.  Alternatively, the respondents are to be ordered to sell their shares in the Company to the petitioners at a price to be determined by an accountant agreed by both or appointed by the court.  In the further alternative, they seek an order that the respondents be ordered to buy the petitioners’ shares in the Company on the same basis as before.

3.  A validation order was made on 7 April 1997 for payments out of the bank accounts of the Company in its ordinary course of business.  There is no evidence before the court, but I have no reason to think that the Company is not in operation or that it has not been carrying out business and withdrawing funds from its bank accounts on the basis of the validation order made more than 10 years ago.

4.  On 3 July 1997, the petitioners were ordered to pay $500,000 into court as security for the respondents’ costs.  Payment was made into court pursuant to the order on 27 August 1997.

5.  On 16 November 1998, directions were given by Le Pichon J (as she then was) for setting down of the petition for trial in consultation with counsel’s diaries with 4 days reserved.  In the same order, the judge ordered each party to submit the names of two proposed experts to the court for the purpose of valuing the shares in the Company as at the date of the petition and the date of valuation.  The petition was not set down for hearing.

6.  In the meantime, on 27 January 1998, an action was commenced by the Company against nine defendants, one of them being the husband of the 1^st petitioner, in High Court Action No. 1461 of 1998.  Pleadings in that action were closed on 27 May 1998.  Again, no steps were taken in that action to have the matter set down for trial.

7.  On 13 May 1999, the court appointed one Miss Barrick of Arthur Andersen as an expert valuer to value the shares of the Company.  But as the parties could not agree on the payment arrangements for the expert, the expert was never instructed to carry out the valuation.  By the time the petitioners’ solicitors sought to follow up the matter in June 2000, Miss Barrick had already left the accountants’ firm and her whereabouts were not known.

8.  In March 2000, the Hong Kong shareholders of the Company being the respondents in the winding-up petition issued a writ in High Court Action No. 2167 of 2000 against the three Taiwanese shareholders.  They claimed that they were entitled under an agreement made in October 1994 to purchase the shares of the Taiwanese shareholders in the Company at $1 per share.  A defence was filed in May 2000.  No steps had been taken in that action save for the summons and order in 2000 mentioned below.

9.  On 13 October 2000, directions were given by Chung J on a consent summons taken out by the parties.  In the winding-up proceedings, it was ordered that the petitioners’ summons dated 4 September 2000 for the appointment of a new valuation expert and the respondents’ summons dated 10 October 2000 for the stay of the winding-up petition pending the outcome of High Court Action No. 2167 of 2000 be adjourned to a date to be fixed with one day reserved.  In High Court Action No. 2167 of 2000, it was ordered that the defendants’ summons of 4 September 2000 to stay the action be adjourned to a date to be fixed.

10.  Again, no date was fixed pursuant to the order made by Chung J.  The winding-up proceedings and the two High Court actions have been dormant ever since 13 October 2000.

11.  On 5 September 2008, I gave directions to restore the winding-up petition for hearing to today to consider dismissal of the petition.  I also gave directions for evidence to be filed by 12 September 2008.  No evidence has been filed by any of the parties.

12.  On 17 September 2008, the petitioners’ solicitors wrote to the court stating that the petitioners are endeavouring to reach a global settlement with the respondents encompassing dismissal of the petition and the two High Court actions.  No such agreement has been reached as of today.

13.  Mr Haddon-Cave appearing for the petitioners has urged the court to adjourn the petition to a date to be fixed in consultation with counsel’s diaries.  He seeks a similar order for the two High Court actions.  Mr Fung appearing for the respondents has asked the court to adjourn everything for two months.

14.  As I have indicated to counsel, a petition for winding up is a class remedy and is not to be regarded as private litigation involving the parties alone.  With the delay of over 7 years, it is plainly out of the question that the court would exercise its power to grant winding-up relief in this situation.  I see no reason why I should not dismiss outright the relief sought for winding up in the petition and this is what I am going to do.

15.  I order that the prayer in the petition for winding up be struck out.

16.  As for the reliefs sought under section 168A, I am prepared to give one last chance to the parties to persuade this court why the petition should not be struck out for inordinate delay and want of prosecution.  I would order that the petition be adjourned for this purpose and that the two High Court actions are also to be brought up on the same occasion.  I recognise that this may not be a suitable opportunity to deal with the two High Court actions as there are other parties involved and they are not presently before this court.

17.  I therefore give the following directions in the petition and the two High Court actions:

(1)  the petition in HCCW No. 56 of 1997, High Court Action No. 2167 of 2000 and High Action No. 1461 of 1998 be adjourned to a date to be fixed with 2 hours reserved and that an early hearing date, not earlier than 14 days from today, be given.  The parties are to appear and show cause why the three proceedings should not be struck out for inordinate delay and want of prosecution;

(2)  the parties are to file and serve evidence within 14 days hereof giving a proper explanation for the delay in the proceedings. 

18.  Both parties have urged me to make no order as to costs for the hearing of today, recognising that the delay is on both sides.  I will make no order as to the costs of the hearing of today, save that the Official Receiver’s costs in the sum of $10,700 is to be paid out of the petitioners’ deposit.