YEUNG BING KWONG KENNETH v. MOUNT OSCAR LTD

HCMP 773/2018

[2019] HKCFI 1454

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 773 OF 2018

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R U L I N G

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1.  On 24 December 2018, this court handed down judgment dismissing the originating summons issued by the applicant which sought a declaration that the ordinary resolution passed at the EGM of the respondent company dated 9 March 2018 to remove him as a director is invalid or otherwise null and void and an injunction to restrain the company from implementing or otherwise acting upon the resolution.

2.  The gist of the applicant’s complaint is that there was procedural irregularity in respect of the passing of the resolution.  While section 463 of the Companies Ordinance affords a director faced with a proposed resolution to remove him an opportunity to be heard and to make representations at a meeting, no reasons for the proposal to remove the applicant had been given to him despite repeated demands.  The applicant, therefore, complains that he had not been given a real, genuine or reasonable opportunity to make reasonable representations at the EGM.

3.  Since there is no express provision in the Companies Ordinance which requires the giving of reasons, in essence, the applicant is contending that the requirement to give reasons should be read into it by necessary implication.

4.  For the reasons given in the judgment, this court is of the view that the applicant has not even come close to reaching the high threshold required for including the additional requirement of giving reasons to him as an affected director by way of necessary implication under the Companies Ordinance.  This court is also of the view that the two authorities relied upon by the applicant do not assist him at all.

5.  There is no dispute between the parties that costs should follow the event.  The only difference between them is whether this case warrants costs on an indemnity basis.  There is also no dispute between the parties as to the principles governing the award of indemnity costs.

6.  Mr Kok for the company submits that the application should never have been brought against the company and that the originating summons was, indeed, wholly unmeritorious and utterly devoid of merit relying on two Court of Appeal authorities of Huge Dragon Corp Ltd v Lung Mun Oasis [2014] 3 HKLRD 286 and Hengshi International Investments Ltd v Bayspring International Ltd HCMP 1320/2016 (unreported, 8 July 2016).

7.  This court agrees with Mr Kok that the application is wholly unmeritorious and should never have been brought.  There is no legal basis whether statutory or otherwise in support of the application.  In these circumstances, it seems to this court that it is, indeed, appropriate to exercise its discretion to award costs on an indemnity basis and will so order.

8.  Costs of the originating summons, including the hearing before Justice Anthony Chan and today's hearing, be to the respondent company to be taxed if not agreed on an indemnity basis with certificate for counsel.