ACOS S.P.A. v. TSE SIU KEUNG AND ANOTHER

HCMP1978/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1978 OF 2011

____________________

----------------------

BETWEEN

____________________

_______________

J U D G M E N T

_______________

1.  I have before me an application by the majority shareholder of the 2nd Defendant (“the Company”) for an order under section 114B of the Companies Ordinance to convene an extraordinary general meeting to remove the 1st Defendant as a director.

2.  The only ground for contesting the application is that an order is unnecessary. The 1st Defendant, who represented himself before me, says that he did not attend an extraordinary general meeting convened for 11am on 30 July to consider a resolution for his removal as a director as a result of a misunderstanding and that it should have been clear to the Plaintiff from the outset, or certainly by 20 October 2011 when he spoke to the Plaintiff’s solicitors, that he did not object to an extraordinary general meeting. Indeed, he told me, he would like one at which he could record certain concerns he has about the conduct of the majority shareholder.

3.  The law is clear in the relevant respect.  An order should only be made when it is impractical to convene a meeting (see the language of section 114B itself and my judgment in Re Mandarin Capital Advisory Limited [2011] 2 HKLRD 1003 at paragraph 5).

4.  The live issue is whether or not the evidence demonstrates that the 1st Defendant’s explanation for his behaviour is disingenuous, as is his protestation that he does not object to an extraordinary general meeting and would attend one, or whether there has been a genuine misunderstanding.

5.  The 1st Defendant signed the notice of the meeting and clearly knew that it was to take place at 11am and clearly knew what the purpose of the meeting was.  He did not, however, turn up at 11am.  He says he did not do so because he was expecting a proxy from the Plaintiff, authorising a person to attend and vote, and none had been received by the Company.

6.  I do not accept this.  The 1st Defendant knew that the Plaintiff wanted the resolution removing him passed.  He does not suggest that proxies had been provided by the Plaintiff prior to previous extraordinary general meetings or annual general meetings.  As a matter of law, what he says he expected and understood as a result of what he had been told by a company secretary was wrong (see section 115 of the Companies Ordinance).

7.  The Plaintiff’s representative, Mr Marco Bergozza, waited for some time for the 1st Defendant to arrive and then left.  The 1st Defendant says that he in fact did eventually attend but only did so at 11.30am and, presumably, just missed Mr Bergozza.  Mr Bergozza says that he tried phoning the 1st Defendant’s mobile telephone but could not get through.  The 1st Defendant says he never received any calls.  He also says that he did not receive a letter from the Plaintiff dated 1 August 2011 which was sent both by email to the Company and to two addresses which the Plaintiff believed were addresses at which the 1st Defendant was likely to receive documentation.  The letter made it clear that unless the 1st Defendant was co-operative, an application would be made to the court.

8.  In my view, the evidence demonstrates that at the time the application was issued, the Plaintiff legitimately thought that it was impracticable to call a meeting.  I am satisfied that it is likely that unless the application had been issued, the 1st Defendant would have found other excuses for not attending the meeting.

9.  The 1st Defendant says that on 22 October, after the application was issued, he phoned the Plaintiff’s solicitors and told them that he had no objection to an extraordinary general meeting to consider his removal as a director.  The Plaintiff has not responded directly to this evidence but says that such discussion as took place was part of without-prejudice discussions.

10.  Mr Richard Zimmern, who appeared for the Plaintiff before me, says that the inference must be that the 1st Defendant did not make it clear that the application was unnecessary.  Similarly, he says that he did not take the opportunity to do this at the call-over before me on 11 November 2011. 

11.  I am satisfied that, at the time the application was issued, it was impracticable to convene an extraordinary general meeting.  I consider, in all the circumstances, that it is appropriate to make an order in the terms of the originating summons.