NOBLE CREST LTD v. CHAU YUET CHING BRENDA AND OTHERS

HCMP 596/2017 &
HCMP 597/2017 &
HCMP 598/2017 &
HCMP 599/2017
(Heard together)

[2023] HKCFI 115

HCMP 596/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 596 OF 2017

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AND

HCMP 597/2017

MISCELLANEOUS PROCEEDINGS NO. 597 OF 2017

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AND

HCMP 598/2017

MISCELLANEOUS PROCEEDINGS NO. 598 OF 2017

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AND

HCMP 599/2017

MISCELLANEOUS PROCEEDINGS NO. 599 OF 2017

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(Heard Together)

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J U D G M E N T

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A.  INTRODUCTION

1.  The Plaintiff in each of the four actions commenced proceedings by way of an originating summons dated 16^th March 2017 (“the Originating Summonses”), seeking an order pursuant to s.42 Companies Ordinance (Cap.622) that certain documents filed in the Companies Registry be expunged (“the Impugned Documents”), and that the information in the documents be rectified and removed. I will refer to the Plaintiff in HCMP 596/2017 as “Noble Crest”, the Plaintiff in HCMP 597/2017 as “Full Honest”; the Plaintiff in HCMP 598/2017 as “East Victory”, the Plaintiff in HCMP 599/2017 as “Million Globe”, and the Plaintiffs collectively as the “the Plaintiff Companies”. The Defendants in each of the actions are the same.

2.  On 25^th July 2017, DHCJ To gave leave to the parties to continue the actions as if they had been begun by writ.

3.  By summonses of 9^th June 2022 (“the O.14 Summonses”), the Plaintiff in each of the four actions applied for summary judgment against the Defendants.

B.  THE BACKGROUND

4.  Unless otherwise indicated, the following is not in dispute.

5.  At all material times, each of the Plaintiff Companies owned valuable properties.

6.  Up until 14^th September 2016, the 1^st Defendant (“Madam Chau”) was the sole shareholder of the Plaintiff Companies.

7.  Up until 12^th January 2016, Madam Chau was also a director of Noble Crest, East Victory and Million Globe, together with her son (“Chau Junior”). On 12^th January 2016, Madam Chau resigned as director of Noble Crest, East Victory and Million Globe. Chau Junior was at all material times the sole director of Full Honest. Therefore, it is the Plaintiff Companies’ case that from 12^th January 2016, Chau Junior has been the sole director of the Plaintiff Companies.

8.  On 14^th September 2016, Madam Chau transferred her share in each of the Plaintiff Companies to Pink Diamond Holdings Limited (“Pink Diamond”). I will refer to the transfers as “the Pink Diamond Transfers”.

9.  It is not now disputed that (1) Madam Chau ceased to be a shareholder of the Plaintiff Companies from 14^th September 2016, and (2) the sole legal owner of each of the Plaintiff Companies thereafter at all times has been (and still is) Pink Diamond.

10.  Nevertheless, the Impugned Documents then came to be signed and filed with the Companies Registry, without the knowledge or approval of either Chau Junior or Pink Diamond. They were as follows:

10.1  in November 2016, and in respect of each of the Plaintiff Companies: a Notice of Change of Company Secretary and Director (Form ND2A) signed by Madam Chau indicating that (1) Chau Junior ceased to act as director, (2) Madam Chau was appointed as director, (3) the existing company secretary ceased to act and (4) the 2^nd Defendant was appointed as the company secretary;

10.2  also in November 2016, and in respect of each of the Plaintiff Companies: a Notice of Change of Address of Registered Office (Form NR1) to an address on Hoi Bun Road, signed and presented by the 2^nd Defendant (together with the documents in the previous paragraph, “the November 2016 Documents”);

10.3  in December 2016, and in respect of Noble Crest, East Victory and Million Globe only: an Annual Return (Form NAR 1) signed and presented by the 2^nd Defendant indicating that Madam Chau was the sole director and shareholder and that the 2^nd Defendant was the company secretary;

10.4  in February 2017, and in respect of each of the Plaintiff Companies: a Notice of Change of Company Secretary and Director (Form ND2A) signed by Madam Chau indicating that (1) the 2^nd Defendant ceased to act as company secretary and (2) the 3^rd Defendant was appointed as company secretary;

10.5  also in February 2017, and in respect of each of the Plaintiff Companies: a Notice of Change of Address of Registered Office (Form NR1) to an address at Chatham Court, signed by Madam Chau (together with the documents in the previous paragraph, “the February 2017 Documents”);

10.6  in March 2017, and in respect of each of the Plaintiff Companies: a Notice of Change of Company Secretary and Director (Form ND2A) signed by the 4^th Defendant (“William”) indicating that (1) Madam Chau ceased to act as director and (2) William was appointed as director.

11.  It is William’s case that the Impugned Documents are based on the following resolutions of the Plaintiff Companies (“the Underlying Resolutions”).

11.1  In November 2016, Madam Chau as the sole member of each of the Plaintiff Companies passed resolutions to appoint herself as a director and remove Chau Junior as a director. There were also board resolutions to remove the existing company secretary, appoint the 2^nd Defendant as company secretary, and change the companies’ registered office.

11.2  In February 2017, Madam Chau as the director of each of the Plaintiff Companies passed resolutions to accept the resignations of the 2^nd Defendant as company secretary, appoint the 3^rd Defendant as company secretary, and change the companies’ registered office.

12.  Furthermore, on around 16^th February 2017, Madam Chau, who was no longer a shareholder of the Plaintiff Companies, purportedly transferred shares in the companies for a nominal consideration of $1 to companies owned and/or controlled by William, as follows:

12.1  BMC Strategic Partners (Int’l) Limited (“BMC Strategic”) (share in Noble Crest).

12.2  BMC Investment (HK) Limited (share in Full Honest);

12.3  BMC Intech (Int’l) Limited (share in East Victory);

12.4  BMC Property Planning (Int’l) Limited (“BMC Property”) (share in Million Globe).

I will refer to these as “the BMC Transfers”.

13.  It is William’s pleaded case that Madam Chau came to make the BMC Transfers because she owed William’s service companies (specifically, BMC Decoration Limited, BMC Construction Centre Limited (“BMC Construction”) and Talent Express Consultants Limited) fees for outstanding property management, construction and decoration services. In particular, it was pleaded that:

13.1  in around July 2016, Madam Chau sought to engage William and/or some of his service companies to carry out various projects (“the New Projects”). However, William said he would only do this if Madam Chau paid off part of the amounts already outstanding;

13.2  Madam Chau said that she could obtain the necessary funds to finance the costs of the New Projects or to pay off her outstanding debts by selling or using properties that she held through various corporate vehicles;

13.3  whilst Madam Chau was able to identify the properties, she could not identify all of the corporate vehicles that were holding the properties;

13.4  William helped Madam Chau to identify various such companies, including the Plaintiff Companies;

13.5  in around late August 2016, an oral agreement (“the August Agreement”) was reached between Madam Chau, William and his girlfriend Ms Lam that (inter alia):

13.5.1  William would procure his companies to complete the New Projects for Madam Chau;

13.5.2  Madam Chau would charge her shares in the Plaintiff Companies to William or his companies to secure her liabilities to William and his companies;

13.5.3  William could appoint or remove directors of the Plaintiff Companies at any time;

13.5.4  William could sell the shares in the Plaintiff Companies at any time, using the proceeds to pay Madam Chau’s liabilities.

13.6  Pursuant to the August Agreement, William procured each of BMC Construction, BMC Strategic, and BMC Holdings (Int’l) Limited (“BMC Holdings”) to enter into an agreement in November or December 2016 with Madam Chau for the carrying out of various items of work;

13.7  Madam Chau effected the BMC Transfers to facilitate the sale of the shares of the Plaintiff Companies pursuant to the terms of the August Agreement;

13.8  Madam Chau signed the November 2016 Documents in connection with her request to William to assist her in taking control of the Plaintiff Companies by removing Chau Junior as director, appointing herself as director, and changing the company secretary and registered address of the Plaintiff Companies;

13.9  Madam Chau signed the February 2017 Documents in connection with her request to remove Chau Junior as director, and change the company secretary and registered address of the Plaintiff Companies;

13.10  the Pink Diamond Transfers were made with the intention of defrauding Madam Chau’s creditors, and were voidable under s.60 of the Conveyancing and Property Ordinance (Cap. 219);

13.11  in HCA 652/2017, William and a number of his companies counterclaimed against Madam Chau and Pink Diamond for, inter alia, the specific performance of the August Agreement and for the setting aside of the Pink Diamond Transfers under s.60 of the Conveyancing and Property Ordinance (Cap. 219).

14.  On 7^th April 2021, DHCJ To struck out the part of the Amended Defence and Counterclaim in HCA 652/2017 which alleged that the Pink Diamond Transfers were made with intent to defraud creditors and which sought to set aside the transfers. DHCJ To dismissed the counterclaim brought by William and his companies against Pink Diamond.

15.  On 8^th December 2021, a Re-Amended Defence and Counterclaim was filed in HCA 652/2017, deleting the counterclaim against Pink Diamond, and the counterclaim against Madam Chau for loss and damage for failing to perform the August Agreement, and specific performance of the August Agreement.

C.  THE DEFENDANTS’ STANCES

16.  As Ms Kinsey Kang, counsel for the Plaintiffs, submitted, it can therefore no longer be disputed by William that at all material times, Pink Diamond was the shareholder of the Plaintiffs. Mr Ronald Pang, counsel for William, confirmed at the hearing that it was accepted that Pink Diamond was the legal owner of the shares in the Plaintiff Companies at all material times.

17.  Instead, William argues that:

17.1  the Plaintiff Companies are not authorised to sue and/or are not the proper plaintiffs to commence these proceedings, as the beneficial ownership of the shares in the Plaintiff Companies is in dispute;

17.2  the Plaintiff Companies have not shown that Pink Diamond is prima facie beneficially entitled to the shares in the Companies;

17.3  whilst William’s counterclaim based on the August Agreement as a concluded contract was struck out in HCA 652/2017, this did not preclude a “subsequent trust” arising, being a common intention constructive trust arising, after the August Agreement, that Madam Chau was to hold the shares of the Plaintiff Companies or the properties they owned on trust for William such that he would be free to deal with them however he wishes, as required by projects undertaken;[1]

17.4  alternatively, Madam Chau made a representation that she would not deal with the properties (owned by the Plaintiff Companies), so that it was open to William to deal with them; William relied on the representation to investigate the properties, and suffered detriment, and it would be unconscionable for Madam Chau to now retract;[2]

17.5  alternatively, William provided valuable consideration for the shares of the Plaintiff Companies by providing services to Madam Chau; he was a bona fide purchaser of the shares in the Plaintiff Companies without notice, and ranked higher in priority to Pink Diamond.[3]

18.  As to the position of the defendants to the current sets of proceedings other than William:

18.1  Madam Chau does not contest the proceedings;

18.2  the 2^nd Defendant initially filed a defence, saying its understanding was that Madam Chau was the sole shareholder and director of the Plaintiffs and had the authority to effect the changes as reflected in the documents filed with the Companies Registry. It has subsequently indicated that it takes a neutral stance, and asked to be excused from attending the hearing;

18.3  the 3^rd Defendant filed an Acknowledgment of Service indicating an intention to contest the proceedings, but has not filed any defence nor appeared at the hearing;

18.4  the Registrar of Companies (“the Registrar”), who is the 5^th Defendant, has indicated a neutral stance in respect of paragraphs 1 and 2 of the Originating Summonses, but expressed the view that paragraph 3 thereof (relating to the delivery of a sealed copy of the court’s order to the Registrar) is not necessary.

D.  THE LEGAL PRINCIPLES

D1.  Summary judgment

19.  There is no dispute that it is for a defendant to satisfy the court that he has a real or bona fide defence, or a fair probability or reasonable grounds that a bona fide defence exists. The test is not whether the defendant’s assertions are believed; it is whether they are believable. See Hong Kong Civil Procedure 2023, note 14/4/9, 14/4/9A.

20.  Mr Pang emphasised that before the defendant’s defence is considered the plaintiff first has to prove a prima facie sustainable case for judgment. Only then does the burden shift to the defendant to show that there is a triable issue or arguable defence which ought to be tried: Hong Kong Civil Procedure 2023, note 14/4/1.

21.  Ms Kang emphasised that in considering whether there are triable issues, the court will not just take the alleged defence at face value but test it against matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward, or whether the defence has only recently been raised despite opportunity being given to the defendant to respond earlier: Paul Y Management Ltd v Eternal Unity Development Ltd, unreported, CACV 16/2008, 12^th August 2008 (Cheung JA, as he then was).

D2.  Section 42 CO

22.  The material part of s.42 of the Companies Ordinance (Cap. 622) (“the CO”) provides as follows.

(1)  The Court may, on application by any person, by order direct the Registrar to rectify any information on the Companies Register or to remove any information from it if the Court is satisfied that –

(a)  the information derives from anything that –

(i)   is invalid or ineffective; or

(ii)  has been done without the company’s authority; or

(b)  the information –

(i)  is factually inaccurate; or

(ii)  derives from anything that is factually inaccurate or forged.

  …

(4)  The Court must not order the removal of any information from the Companies Register under subsection (1) unless it is satisfied that—

(a)  even if a document showing the rectification in question is registered, the continuing presence of the information on the Companies Register will cause material damage to the company; and

(b)  the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register.

23.  The threshold for removal rather than rectification is not high. If there is a prospect of damage being caused to the company by the information on the register, that would justify removal. The continued presence of incorrect information may give rise to a real risk that the persons dealing with the company would question the identity of the shareholders and directors, creating confusion, uncertainty, and time and cost on the part of the companies in dealing their affairs. See Sterling Payment Services Ltd v The Registrar of Companies and anor [2021] HKCFI 2047 at [15] to [16] (Mr Recorder Manzoni SC).

24.  Mr Pang had no issue with this, but submitted that where the beneficial ownership of shares in a company is disputed, that issue needs to be resolved first before any order can be made under s.42 CO, citing Chau Sai Hong and ors v Cheng Stephen Sohim and ors, unreported HCMP 1556/2016, 11^th December 2020 at [36].[4] However, it seems to me that this authority is simply an illustration (of a case where the court was not satisfied that the requirements of s.42 CO were met).

E.  WILLIAM’S DEFENCES

25.  I have outlined above the arguments which were put forward on behalf of William. Whilst five separate arguments were advanced, it seems to me that a critical aspect to all of them is the factual background giving rise to William’s alleged beneficial interest in the shares in the Plaintiff Companies or the properties they owned.

26.  In relation to the defences based on (1) common intention constructive trust, (2) proprietary estoppel, and (3) bona fide purchaser for value without notice, Mr Pang confirmed that the evidence relied on was that contained in paragraphs 27 to 42 of the 2^nd Affirmation of Chan Bo Man William (“William 2^nd”).

E1.  Common intention constructive trust

27.  The claim in William 2^nd paragraphs 39 to 42 is that Madam Chau and William made the August Agreement, and William was to arrange the transfer of the shares in the Plaintiff Companies to his nominees. “At this point, it was quite obvious that the Subject Companies were meant to be mine and handling as I see fit and Madam Chau had no right to deal with the Subject Companies as she saw fit. Therefore, even if somehow without my knowledge, procured the Subject Companies, it would hold it on trust for my benefit.”[5]

28.  I agree with Ms Kang’s submissions that the claim of a common intention constructive trust is not capable of belief by reason of the following.

28.1  William produced an agreement dated 29^th November 2016 (after the August Agreement) regarding a project in Sai Kung. William was to provide funds for the project and earn interest in return. Madam Chau agreed to provide Noble Crest and its properties as security. Such an intention directly contradicts the supposed intention that William owned the beneficial interest in Noble Crest.

28.2  William’s pleaded case in HCA 652/2017[6] was that the purpose of the August Agreement was to enable the Plaintiff Companies or the properties they owned to be sold, with the proceeds being used to (inter alia) pay Madam Chau’s liabilities to William and his companies. This again is entirely inconsistent with the supposed intention that William in fact owned the Plaintiff Companies – if he did, then the proceeds would be his, rather than Madam Chau’s.

28.3  William’s evidence in HCA 652/2017 was that after entering into the August Agreement, Madam Chau entered into estate agency agreements with William’s company to sell the properties held by Madam Chau’s companies. Madam Chau would be free to use the proceeds of sale to repay the debts to William and his companies. Again, this is inconsistent with the supposed intention that William in fact owned the Plaintiff Companies.

28.4  William’s evidence in William 2^nd is that after selling the Plaintiff Companies’ properties and repaying debts owed to William, the excess cash was to be given to Madam Chau (paragraphs 34, 35). This is inconsistent with the supposed intention that William beneficially owned the Plaintiff Companies.

28.5  By his own admission, the claim of a common intention constructive trust was not made in William’s first affirmation or the pleadings in HCA 652/2017. It is said that the reason for this was that he was advised that there was an injunction in those proceedings which prevented him from asserting that he was the owner of the Plaintiff Companies, which also precluded him from asserting that the shares of the companies were held on trust for him; he had always intended to amend his pleadings once he managed to discharge the injunctions. (In other words, it is not that William inadvertently omitted to mention the claim or that he was unaware of the importance of doing so, but that he was prevented from doing so.) However:

28.5.1  the injunction (made on 29^th March 2017 by Lok J) only prohibited William from claiming ownership in Lucky Top Enterprise Limited, More Harvest Investment Limited and Manyrich Investment Limited, but not the Plaintiff Companies;

28.5.2  William never applied to vary the injunction on the ground that he intended to advance a defence of a common intention constructive trust. He did however apply to discharge the injunction, and for the purpose of doing so, raised the background of the parties’ dealings, but did not mention any common intention constructive trust.

28.6  The evidence relied on by William (William 2^nd paragraphs 27 to 42) is inconsistent in material particulars with William’s pleadings in these proceedings and his pleadings and evidence in HCA 652/2017. For example, in William 2^nd paragraphs 32 to 33, William claims that he helped Madam Chau to find out which companies owned certain of Madam Chau’s properties, and to obtain a valuation of the properties; Madam Chau picked nine properties and she and William prepared a list to facilitate the transfer of the companies which held the properties, which included the Plaintiff Companies. He exhibited this list (which also set out the property valuations) which he claimed was prepared in 2012 to 2013 (“the 2012-13 List”). However:

28.6.1  William’s pleaded case in paragraphs 9 to 12 of his Defence of January 2018, for which he signed a statement of truth, was that in July 2016 (that is, some four years after he allegedly drew up the 2012-2013 List), Madam Chau did not know what companies were holding her properties, and it was only at that point that William helped her discover that the Plaintiff Companies owned some of her properties;

28.6.2  William’s answer to a request for further and better particulars in HCA 652/2017[7] stated that at the time when the August Agreement was made, William was still in the course of helping Madam Chau ascertain the market value of the properties held by the Plaintiff Companies, and these were not ascertained until mid-September;

28.6.3  it is not disputed that in HCA 652/2017, William claimed that he prepared multiple drafts of a table showing Madam Chau’s properties in 2016.[8] The first was said to have been prepared in July 2016, and at that stage neither the holding companies nor the property valuations had been obtained. The second was said to have been prepared in August 2016 after William had identified the corporate owners of the properties. The third was said to have been prepared in September 2016 after William had obtained a valuation of the properties.

28.7  Indeed, William’s evidence regarding the 2012-13 List is not consistent even within William 2^nd itself. In paragraphs 29 to 33 he says that the 2012-13 List was Madam Chau’s selection of nine properties from a handwritten list which Madam Chau had prepared. However, only one of the properties in the handwritten list appears in the 2012-13 List.

28.8  Furthermore, the 2012-13 List could not have been prepared in 2012 or 2013 as it contains information of several events that happened many years later. These were set out in detail in Chau 3^rd (paragraphs 12 to 17) and have not been denied by William. It suffices to refer to one example as an illustration. The 2012-13 List notes that the property held by Million Globe was sold to another party. That sale in fact took place in July 2019.

29.  Thus even if (as William claims) there were isolated parts of Madam Chau’s evidence that are consistent with his case, this would not overcome the incredible aspects of William’s case.

30.  Incidentally, insofar as the properties held by the Plaintiff Companies are concerned (rather than the shares of the companies),[9] no common intention constructive trust could have arisen between Madam Chau and William as to their beneficial interest, for the simple reason that the properties were not owned by Madam Chau.

E2.  Proprietary estoppel

31.  The paragraphs of William 2^nd used to support the claim of common intention constructive trust were said to also support the claim of proprietary estoppel. When pressed, Mr Pang indicated that the representation said to have been made by Madam Chau was that alleged in paragraph 35: “In gist, I was to calculate the value of Madam Chau’s property and take sufficient property that represented the monies then mentioned above convert the same to cash.[10] As far as Madam Chau represented to me, I was to take charge and the properties would be mine. She only cared that she received the excess and that I agree to go ahead with the aforesaid properties.”

32.  It is clear from the context of the paragraph, and Mr Pang’s confirmation of reliance on the same paragraphs of William 2^nd as for the trust claim, that the same sequence of events, including Madam Chau’s selection of nine properties that led to the 2012-13 List allegedly being prepared in 2012-13, is being relied upon. There is no claim that an additional or separate representation was made to William regarding his supposed ownership of the Plaintiff Companies.

33.  In the circumstances, the defence is beset by the same problems of credibility as the one based on common intention constructive trust. It is not possible for the claim of proprietary estoppel to be an arguable defence in circumstances where the defence based on common intention constructive trust has been rejected for being incapable of belief.

E3.  Bona fide purchaser

34.  It is not clear to me how William seeks to deploy this defence. It was said that he provided valuable consideration for the shares of the Plaintiff Companies. But it is not disputed that prior to the purported transfer of the shares to William in February 2017, the shares had already been transferred to Pink Diamond in September 2016. William could therefore not have been a purchaser of the legal title to the shares; nor could it be said that Pink Diamond’s interest in the shares was merely an equitable one which could be defeated by a subsequent bona fide purchaser of the legal title to the shares.

35.  Furthermore, the defence again relies on the same paragraphs of William 2^nd as for the trust claim. No credible defence “[b]ased on previous dealings and the goodwill and relationship with [Madam Chau]”[11] as evidenced by those paragraphs can arise.

E4.  Prima facie case regarding beneficial ownership

36.  William says that the Plaintiff Companies have not shown that Pink Diamond is prima facie beneficially entitled to the shares in the Companies and they have therefore failed to meet the minimum requirement under RHC O.14 of showing a prima facie case of entitlement to judgment. The argument is that whilst Pink Diamond has been entered into the register of members of the Plaintiff Companies, the bought and sold notes in question have not been stamped and are therefore inadmissible in these proceedings.[12]

37.  I have difficulty understanding the argument. William accepts that Pink Diamond is the legal owner of the shares. That in itself is surely sufficient to establish, prima facie, that Pink Diamond is also the beneficial owner of the shares, there being no reason to make any assumption that the legal and beneficial ownership are split amongst different persons.

E5.  Authority of Plaintiff Companies to bring present proceedings

38.  William challenges the authority of the Plaintiff Companies to bring the present proceedings, on the basis that only the beneficial owner of the Plaintiff Companies could have properly authorised the companies to do so, but the issue of such beneficial ownership is in dispute.

39.  However, given that I do not accept that William has a credible case for beneficial ownership of the Plaintiff Companies, this point falls away.

F.  THE S.42 CO REQUIREMENTS

40.  At the time when Madam Chau signed the Impugned Documents, she was admittedly neither a director nor a shareholder of the Plaintiff Companies, and there is no credible case that she in fact held the shares on trust for William or that he otherwise acquired a beneficial interest in them.

41.  I therefore agree with Ms Kang that there is no arguable defence to the Plaintiff Companies’ claim under s.42(1) CO.

41.1  The Underlying Resolutions which were the basis for the Impugned Documents were signed by Madam Chau, purportedly as shareholder and director of the Plaintiff Companies, when in fact she was neither. The information in the Impugned Documents regarding the appointment of directors and changes of company secretary and address of registered office therefore derived from something that was invalid and effective (cf. s.42(1)(a)(i) CO).

41.2  The Impugned Documents were signed or presented by one or more of Madam Chau, the 2^nd Defendant and William, without the knowledge or approval of the Plaintiff Companies’ director (Chau Junior) or shareholder (Pink Diamond). The information in the Impugned Documents therefore derived from something done without the Plaintiff Companies’ authority (cf. s.42(1)(a)(ii) CO).

41.3  The information in the Impugned Documents regarding the appointment of directors, changes of company secretary and address of registered office, and identity of shareholder was factually incorrect (cf. s.42(1)(b)(i) CO).

42.  I accept Ms Kang’s submission that justification for the removal of the information in the Impugned Documents has been established under s.42(4) CO.

42.1  Even if a document showing rectification is registered in the Companies Registry, the continuing presence of the wrong information as to the identity of the Plaintiff Companies’ officers, shareholder and address of registered office would cause material damage to the companies, since they could cause confusion to third parties dealing with the companies as to the true identity of the shareholder and officers of the companies. In the present case, the risk that this could happen is a very real one, given that there have actually been occasions on which William and his companies have sought to deal with third parties on the basis that they have an interest in one of the Plaintiff Companies.

42.1.1  On 23^rd March 2022, solicitors for BMC Strategic sent a letter to the solicitors acting for the purchaser of Noble Crest’s property, claiming that BMC Strategic was the sole shareholder, and William was the sole director, of Noble Crest, casting doubt on the validity of the assignment to the purchaser, and making requests for information and documents.

42.1.2  On 6^th April 2022, Chau Junior’s solicitors received a letter from the solicitors acting for the purchaser of a property from Million Globe, informing him that BMC Property claimed to be the sole shareholder of Million Globe and reserved the right to set aside the assignment of the property. The purchaser reserved his rights to seek indemnification from Chau Junior for loss and damage suffered as a result.

42.2  The Plaintiff Companies’ interest in removing the information in the Impugned Documents outweighs the interest of the Defendants in the information continuing to appear on the Companies Register, given that there is no credible case that the 2^nd Defendant, 3^rd Defendant and William were ever lawfully appointed as claimed.

G.  DISPOSITION

43.  I order the Registrar should remove the Impugned Documents from the Companies Registry.

44.  In view of the order for removal, there is no need to make any order for rectification of information.

45.  In view of s.42(8) CO, there is no need to separately order that the Plaintiff Companies deliver a sealed copy of any order to the Registrar.

46.  I further make a costs order nisi that the 2^nd Defendant, 3^rd Defendant and William pay the costs of and occasioned by the Originating Summonses and the O.14 Summonses to the Plaintiff Companies and the Registrar, to be taxed if not agreed. In respect of the 2^nd Defendant, it is liable to pay such costs only up 30^th September 2022, when it indicated by letter that it would take a neutral stance in the application.