MARCO CAMURRI v. DANIEL LI KIN YAN AND ANOTHER

HCMP756/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 756 OF 2007

____________________

____________________

___________________

D E C I S I O N

___________________

1. This is an application by Mr Marco Camurri, a director of Trend Gelato & Food Limited ("the Company"), seeking inspection of minutes of meetings and written resolutions of proceedings of the directors of the Company and also of the books of account and business records of the company.  The application for inspection of the records of directors' proceedings is made pursuant to Mr Camurri’s common law right to do so, and the application for inspection of books of accounts is made under section 121(3) of the Companies Ordinance (Cap.32) and at common law.

2. The respondents to the application are Mr Daniel Li Kin-yan, Miss Catherine Lau Ka-ki (the other two directors of the Company), and the Company itself.  The application was made by an originating summons issued on 20 April 2007.  According to the evidence filed in support of the application by Mr Camurri, apart from being a director of the Company, he is also interested in some 41.99 per cent of its issued shares.  Mr Li personally holds 42.99 per cent of its issued shares, with the remaining 15 per cent of the shares held by a company which is owned by two other persons by the name of Stoppa.

3. As its name suggests, the Company carries on the business of dealing in food and confectionery.  According to Mr Camurri, the intention was that it should source premium gourmet foods and confectionery, including ice-cream and gelato products from Italy, for distribution and sale in Hong Kong and the Mainland.

4. Mr Camurri, Mr Li and the Stoppas also had interests in another company known as Trend Coffee & Food Limited (“Trend Coffee”).  The directors of this other company were Mr Li and one of the Stoppas.  Mr Camurri alleges that a valuable trade mark owned by Trend Coffee was transferred away from it to the Company by Mr Li without proper authority and without the knowledge of Mr Stoppa, and that the trade mark appears to have since been further transferred from the Company to another company called Trend Concept Limited (“Trend Concept”) in which Mr Li and Miss Lau appear to be interested but in which neither Mr Camurri nor the Stoppas have any shareholding, again without their knowledge.  Mr Camurri's evidence is supported by an affirmation filed by one of the Stoppas, Mr Giacomo Stoppa. 

5. There also seem to be other disputes involving other companies which are not relevant to these proceedings.  These disputes are between Mr Camurri and the Stoppas on the one side and Mr Li and Miss Lau on the other.  It is neither necessary nor appropriate to go into or consider the merits of the allegations made by Mr Camurri for the purposes of today's hearing because the scope of today's hearing is relatively limited and, indeed, there is no real opposition to the substance of the application. 

6. It was against this background on 28 March 2007 that solicitors acting for Mr Camurri wrote to the directors of the Company (the letter was addressed for the attention of Mr Li, and there may have been a similar letter addressed to Miss Lau as well) requesting the provision of information and documents relating to the company within the next two days.  It seems that an earlier letter in similar terms, although allowing a slightly longer time for inspection, had been sent some two weeks earlier.  However, the earlier letter was not correctly addressed and was eventually returned, apparently unopened, after the 28 March 2007 letter was sent.

7. No response having been received to this letter, a further letter, which also dealt with some of the other matters, was sent on 3 April 2007 asking for inspection of the company's books and records by 5 pm on 10 April 2007 and warning that failing that, proceedings would be instituted without further notice. 

8. No response to that letter was received until 23 April 2007 when Miss Lau replied, saying in relation to the Company that Mr Camurri had never been denied inspection of the Company's books and records which were kept at its registered offices and were available for inspection, save that in the case of some documents which were said to be with the company's auditors, two clear days' notice were needed to arrange for inspection.  By this time, however, the originating summons in these proceedings had already been issued.  Miss Lau said, however, that it was not received by her until after her letter of 23 April 2007 had been sent.  Today, evidence from Mr Camurri’s solicitors was adduced dealing with the question of service.  From this, it appears that service was effected by leaving the originating summons at the registered office of the Company and at the post box of the residential address of Mr Li and Miss Lau.  It may well be, therefore, that Miss Lau did not in fact see the originating summons until after her letter of 23 April had been sent.

9. Mr Camurri's solicitors wrote back the same day, saying that they would like to come to inspect the documents that were available the next morning and would like to inspect those that were with the Company's auditors two days after that, that is, on 26 April 2007, and asked for confirmation that this would be possible.  No such confirmation was received that evening.  Miss Lau said that the request was not faxed until 5.30 pm in the evening, at which time she was out, and she did not see the request until 6.15 that evening which was after the time limit for response which had been indicated in the letter.

10. No inspection has since taken place.  The reason for this is that there was further correspondence between the solicitors acting for Mr Camurri and with Miss Lau in which the solicitors indicated their dissatisfaction with not having received any response to their letter of 23 April 2007, with Miss Lau writing back to say that it had been received late in the afternoon or evening and that her position remained as stated in that letter.  By a subsequent letter, she indicated that, as a result of the institution of proceedings, she did not propose to correspond further on this matter or to deal with the matter until she had received legal advice and would thereafter act in accordance with legal advice.

11. Subsequently, on 7 May 2007, acknowledgements of service in respect of this application were filed on behalf of Mr Li and Miss Lau indicating, at that stage at least, that they intended to oppose the application.  It seems that towards the end of last week notice was given that the application would not, so far as the substance of it was concerned, be opposed although there was an issue outstanding as to who should pay the cost of these proceedings. 

12. Mr Li and Miss Lau have recently filed affirmations in respect of this matter and they say that although there are no minutes or other records of directors' meetings (which were, according to them, always held informally) they have, in fact, never denied Mr Camurri's right to inspect the Company's books and records.  They suggest that they were never given adequate notice of the proposed inspection so as to enable them to respond prior to the commencement of these proceedings and that, in the circumstances, while they do not oppose an order for inspection and have, in the course of today's hearing, agreed to the terms of a draft order put forward by Mr Brewer, who appears for Mr Camurri, they should not be required to pay the cost of these proceedings. 

13. As to this, Miss Lau says that the letter of 28 March 2007 was not, in fact, received on the same day.  Although she does not indicate in her affirmation when it was actually received, I was informed by Mr Chan who appeared for her today, that it did not arrive until 30 March 2007.  She says in relation to the 3 April letter that to call for inspection on 10 April 2007 was not sufficient notice as there were five days of public holidays intervening from 5 to 9 April 2007.  In relation to the letter from Mr Camurri's solicitors dated 23 April 2007, she says, as I have noted, that it was received by fax at 5.30 pm but did not come to her attention until about 6.15 and that the notice given was, in any event, too short, seeking inspection the next day of those documents that were with the Company and on the 26 April 2007 in respect of those documents that were with its auditors.

14. As I have indicated, there is no dispute as to the right of Mr Camurri to obtain an order for inspection and, accordingly, I shall make an order in terms of the draft order which has been provided by Mr Brewer.  The order also deals with a number of other housekeeping matters that had to be dealt with in the course of today's hearing. 

15. The only substantial issue outstanding is as to the costs of these proceedings, apart from one or two minor items of costs which are separately dealt with in the draft order.  So far as costs are concerned, having considered the matter and the submissions made to me by Mr Chan and Mr Brewer, I do not think that there is any good reason to deny Mr Camurri the costs of this application.  The fact is that despite two requests for inspection, no response at all was given by the respondents prior to the issue of these proceedings.  Even if it were felt that to give inspection on 10 April 2007 would have posed difficulties, no response to that effect was made, nor was there any suggestion prior to the proceedings being issued that inspection would be allowed subject to more notice being given.  Nor was any indication given as to when inspection might be possible.

16. It is pertinent to bear in mind, I think, that under the terms of section 121(3) of the Companies Ordinance, the director's right of inspection of a company's books and records, which are required to be maintained at its registered offices, is to have the ability to inspect them at any time.  Given that it appears to be accepted that some, at least, of the documents were at the Company's offices, it is not entirely clear why these, at least, could not have been made available for inspection on 10 April as requested.  Bearing in mind the response eventually given that two clear days' notice was required to arrange for inspection of documents that were kept with the Company's auditors, it seems to me that notwithstanding the intervening public holidays, close to that amount of notice was, in fact, given by the letter of 3 April 2007 seeking, as it did, inspection towards the end of the day on 10 April 2007 by which time two business days would just about have intervened.

17. Further, in these circumstances, and having regard, in particular, to the silence with which his requests had been met, I do not think that it can be said that Mr Camurri acted precipitately in instituting these proceedings on 20 April 2007.  It seems to me that the essential question in considering whether or not Mr Camurri should get his costs of these proceedings is whether or not he acted reasonably in issuing the proceedings when he did, accepting that Miss Lau may not have been aware of those proceedings at the time that she wrote her letter of 23 April. 

18. It seems to me that looked at overall, there was clearly quite substantial delay in responding to the request for inspection.  Even if one were to accept that the time available to arrange for inspection might be on the tight side, it seems to me that there should have been no difficulty in Miss Lau responding promptly to the request for inspection by indicating that inspection would be allowed, as is her present stance, and that arrangements for this could be made on a little more notice being given.

19. Even after the issue of these proceedings, I have to say that it does not appear that Mr Li or Miss Lau responded particularly constructively to the request for inspection.  The terms of Miss Lau's letter of 23 April 2007 do appear to me to suggest that while some of the documents could be made available for immediate inspection, more time would be needed only in respect of those which were with the Company's auditors.  That was the approach adopted in Mr Camurri's solicitor's response.  Even if Miss Lau felt that inspection the next morning was not feasible, the fact is that no response was made other than to indicate that the matter would now be left in the hands of her solicitors.  No alternatives were suggested.  Further, as I have noted, as late as 7 May 2007 the indications were that this application would be opposed. 

20. In the circumstances, it seems to me that it was entirely reasonable for Mr Camurri to have taken out these proceedings when he did, and that there had been nothing done thereafter on his part that has been unreasonable or has led to an increase in costs.  The reason that today's hearing has been necessary is that it has not been possible for the parties to agree as to the costs of these proceedings so that this question had to be determined by the court. 

21. Thus, for all of those reasons, it seems to me that the appropriate costs order in relation to this matter would be for Mr Camurri's costs to be paid by Mr Li and Miss Lau, such costs to be taxed on a party-and-party basis if not agreed.