TSE FUNG CHIU v. KWOK CHEUNG HING AND ANOTHER

HCMP 2066/2016 & HCMP 3419/2016

[2018] HKCFI 1978

HCMP 2066/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2066 OF 2016

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AND

HCMP 3419/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3419 OF 2016

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(HEARD TOGETHER)

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D E C I S I O N

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1.  I have before me two originating summonses which sought respectively orders for the convening of an annual general meeting and the laying before the Company in annual general meeting of the audited financial statements for the relevant accounting period, and in the case of the later in time of the originating summonses, orders setting aside resolutions at an annual general meeting that was convened purportedly to satisfy the request inherent in the earlier of the two originating summons. The parties, after an extended period of time, agreed to orders being entered by consent for the substantive relief that was sought in both originating summonses.

2.  The applicant in these circumstances predictably seeks his costs.  The underlying issue appears to be this:  There is no dispute that the Company was required to convene an annual general meeting and lay before the Company audited financial statements for the periods in respect of which orders were sought.  The sole director of the Company, who is the 1^st respondent in both sets of proceedings and was a relatively newly appointed director, faced difficulties in providing the auditors with all the financial documentation they required in order to complete the audit, in particular in relation to certain director’s loans.  It seems to me that in the circumstances that the director faced, it was inevitable if the problems were going to be resolved in accordance with the mechanisms contained in the Companies Ordinance (Cap 622) for the Company at some point to make an application to the court to extend the time for convening the annual general meeting and laying audited financial statements before the Company at it.  It seems to me, in these circumstances, that the most equitable way of dealing with costs is simply to provide that the costs of both the applicant and the 1^st respondent are paid out of the assets of the 2^nd respondent. 

3.  Whilst one may, if one descends into the facts, be able to find matters which each party might suggest indicate that the other party has some responsibilities for the practical problems that led to the delay in the annual general meeting being convened, it seems to me that essentially all these relate to the affairs of the Company, which would appear not to have been conducted in accordance with the statutory scheme or terribly efficiently, and that in these circumstances it is appropriate that the Company bears the costs that both parties incurred in respect of both originating summonses.

4.  I will order that the 2^nd respondent in each proceeding pays the applicant and the 1^st respondent’s costs forthwith with a certificate for counsel.  I will make the same order in respect of the hearing before me today.