TONGDA GROUP HOLDINGS LTD v. REGISTRAR OF CO

HCMP 1356/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1356 OF 2004

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D E C I S I O N

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The application

1.  This is an application taken out by Tongda Group Holdings Limited (“the Company”), seeking an order against the Registrar of Companies (“the Registrar”) as follows:

(1)     the Form F3 dated 22 December 2003 filed with the Companies Registry on 24 December 2003 by the Company be withdrawn and/or removed from the register of oversea companies, such withdrawal and/or removal to take effect on the day next following the date of this order;

(2)     further or alternatively, the following documents be accepted by the Registrar for registration:

(a)    a letter dated 19 April 2004 from the Company’s solicitors to the Companies Registry;

(b)   a letter dated 19 April 2004 from the Company to the Companies Registry; and

(c)   a statutory declaration dated 18 May 2004 made by Ko Chun Hay Kelvin (“Mr Ko”), the chief financial officer and company secretary of the Company.

2.  The application was made under section 348 of the Companies Ordinance, Cap. 32 and the inherent jurisdiction of the court.

The background facts

3.  The background facts are not disputed by the Registrar for the purpose of this application.  The Registrar is prepared to proceed on the assumption that the facts as stated in the supporting affirmation made by Mr Ko are true; this is not, however, to be construed as an admission in any other proceedings.  The relevant facts may be stated as follows.

4.  The Company was incorporated in the Cayman Islands and registered in Hong Kong as an oversea company under Part XI of Cap. 32.  The shares of the Company are listed on The Hong Kong Stock Exchange Limited (“the Stock Exchange”).

5.  When the Company became a listed company in about December 2000, Mr Ko was appointed as one of the authorised representatives of the Company to comply with the requirement under rule 3.05 of the Listing Rules, which is to the effect that a listed company shall appoint two authorised representatives who shall at all times act as the company’s principal channel of communication with the Stock Exchange.  The other authorised representative appointed for the purpose of the Listing Rules was the Chairman of the board of directors, Wang Ya Nan (“the Chairman”).

6.  Mr Ko and the Chairman were also appointed the authorised representatives of the Company for the purpose of section 333(1)(c) of Cap. 32, when the Company first established a place of business in Hong Kong.  Under this provision, an oversea company shall, within one month of the establishment of the place of business in Hong Kong, deliver to the Registrar for registration a list in the specified form of the names and addresses of some one or more persons resident in Hong Kong authorised to accept service of process and any notices required to be served on the company.

7.  In early 2001, Mr Ko was assigned to take charge of a project for the Company in Hefei, China and had to spend considerable time there and travel very frequently.  As it was anticipated that he might have difficulty to discharge his duties as the Company’s principal channel of communication with the Stock Exchange, it was resolved at a directors’ meeting on 1 April 2001 that Mr Ko should cease to be an authorised representative of the Company for the purpose of the Listing Rules and that his place should be taken by Wang Ya Hua (“Mr Wang”).  The Stock Exchange was duly informed of this change by a letter of the Company dated 1 April 2001.  There was no discussion at the board meeting to terminate the appointment of Mr Ko for the purpose of section 333(1)(c) or to appoint Mr Wang in his place for that purpose, and Mr Ko had remained an authorised representative for the purpose of accepting service of process and notices for the Company.  Mr Ko also signed a number of specified forms as an authorised representative and the secretary on behalf of the Company for filing in the Companies Registry after 1 April 2001.  They are the annual returns of an oversea company filed on 25 February 2002 and 9 October 2003, a form for change of address of an oversea company dated 22 July 2002, and a notification of changes of secretary and directors dated 23 April 2004.

8.  In December 2003, the Secretarial Department of the Company conducted a review of the statutory records kept by the Company.  On 22 December 2003, Mr Ko was informed by the Secretarial Department that no notice of his ceasing to be an authorised representative of the Company on 1 April 2001 was filed with the Companies Registry.  At that time, neither Mr Ko nor the Secretarial Department had appreciated the distinction between an authorised representative under the Listing Rules and an authorised representative under section 333(1)(c).  Mr Ko signed a Form F3 prepared for him, being the specified form for notification of changes of authorised representatives, and this was filed on 24 December 2003.  This stated that Mr Ko resigned as or ceased to be an authorised representative on 1 April 2001 and Mr Wang was appointed an authorised representative on the same day.  Mr Ko did so in the mistaken belief that such a form was required to be filed with the Companies Registry.

9.  On 18 February 2004, the Company received a summons requiring it to appear on 21 April 2004 at the Eastern Magistrates’ Courts on the information laid by the Companies Registry that it had failed to deliver to the Companies Registry a return of the resignation of Mr Ko and the appointment of Mr Wang as an authorised representative within the prescribed time, being 21 days of 1 April 2001, contrary to inter alia section 335(1)(c).  The criminal proceedings were pending at the hearing of this application.

10.  It was after receipt of the summons that the Company found out the mistake about the Form F3 filed on 24 December 2003 and applied to withdraw the form from registration by a letter of its former solicitors to the Companies Registry dated 26 March 2004.  Further, the Companies Registry was requested to discontinue the summons in the magistrates’ courts.

11.  The Registrar replied on 19 April 2004 stating that the explanation given for the mistake in filing the Form F3 would go to mitigation only and he would proceed with the summons.  As for the application to withdraw the form, this was refused because once a document has been filed with the Registry, “it becomes part of the public records and the Registrar has no statutory power to remove.”

12.  On 19 April 2004, the present solicitors of the Company wrote to the Companies Registry again giving an explanation of how the mistake arose and requesting the Companies Registry not to proceed with its prosecution of the summons.  The Company also wrote separately to the Companies Registry on the same day to clarify and confirm that it has not changed Mr Ko’s status as an authorised representative under section 333 or appointed another in his place and that the Chairman and Mr Ko are the two authorised representatives under section 333(1)(c) since the incorporation of the Company in 2000.

13.  The Registrar made a similar reply on 20 April 2004 as in his earlier letter.

14.  On 19 May 2004, the Company’s solicitors wrote to the Registrar applying for registration of, inter alia, the aforesaid letters from the Company’s solicitors and the Company to the Companies Registry both dated 19 April 2004 and a statutory declaration made by Mr Ko on 18 May 2004, in which Mr Ko gave an account of his appointment as an authorised representative of the Company for the two different   purposes under the Listing Rules and under Cap. 32, how his appointment as an authorised representative under the Listing Rules came to be terminated in April 2001, and how it came about that the Form F3 was filed in error in December 2003.

15.  On 21 May 2004 and 25 May 2004, the Registrar wrote to the Company’s solicitors reiterating his comments in his letter dated 20 April 2004 and stating that he is unable to accede to the Company’s request to file, inter alia, the statutory declaration.

16.  The present application was issued on 31 May 2004.

The statutory provisions

17.  I turn to the provisions in Cap. 32 that are relevant to this application.

18.  Under section 333(3), the Registrar is obliged to keep a register of oversea companies complying with section 333 and shall, upon registration of the documents required by subsection (1) to be delivered by an oversea company for registration, enter the name of the oversea company in the register and issue a certificate that the company is registered under Part XI.  Under section 333(1)(c), it is provided that within one month of the establishment of its place of business in Hong Kong, an oversea company shall deliver to the Registrar for registration a list in the specified form of the names and addresses of some one or more persons resident in Hong Kong authorised to accept service of process and any notices required to be served on the company.

19.  Section 335(1)(c) provides that in case of alteration in the names or addresses of the persons authorised to accept service on behalf of the company, the company shall, within the prescribed time, deliver to the Registrar a return in the specified form containing the particulars of the alteration.  Where an authorised representative no longer wishes to act on behalf of the company, he may also file with the Registrar under section 333B(1) a statement signed by him stating inter alia that the company has been so notified and he shall cease to be registered as an authorised representative on the expiration of six weeks from the date of filing of the written statement.  On the application under section 333B(2) of an oversea company which has not had a place of business in Hong Kong for a period of not less than three years preceding the application, the Registrar shall remove from the register the particulars of any person registered under section 333(1) as an authorised representative.

20.  Section 305 provides for inspection by and production to members of the public of documents kept by the Registrar, as well as the admissibility in evidence of such documents in legal proceedings.  By section 348A, it is provided that the Registrar shall not be responsible for verifying the truth of any statement made in any document delivered to him for registration.  Under section 348B, the Registrar may, if in his opinion it is no longer necessary or desirable to maintain it, destroy or dispose of any document of a company which has been lodged, filed or registered for not less than seven years, or microfilmed or recorded by the imaging method or any other method.

21.  By section 338(1), any process or notice required to be served on an oversea company shall be sufficiently served if addressed to any person whose name has been delivered to the Registrar under Part XI and left at or sent by post to his address as so delivered.  It is well established that the registration by an oversea company of a name and address of an authorised representative for service under section 333 amounts to a submission to the jurisdiction of the courts of Hong Kong (Bank Negara Indonesia v Steering Line (Hongkong) Ltd. [1965] HKLR 675; Employers’ Liability Assurance Corporation Ltd. v Sedgwick, Collins & Co. Ltd. [1927] AC 95).  Even though the name of an authorised representative remained on the register by inadvertence, service on him would be good service on the company (Bank Negara, supra.).  I should mention that as the Chairman has remained an authorised representative since incorporation, there can be no doubt as to the submission of the Company to the jurisdiction of the courts of Hong Kong at all times, whatever argument might be raised on the status of Mr Ko as an authorised representative. 

22.  Section 348, which is the provision relied on by the Company for seeking relief in this application, reads as follows:

“(1)   The Registrar may refuse to register or accept for registration any document delivered to him under this Ordinance if it appears to him that –

(a)   the document is manifestly unlawful or ineffective;

(b)   the document is incomplete or altered; or

(c)   any signature on the document, or digital signature accompanying the document, is incomplete or altered.

…

(3)     Any person aggrieved by a decision of the Registrar under subsection (1) or (2) may, within 42 days of the decision, appeal to the court against the decision and the court may, subject to subsection (4), make such order as it may deem just, including an order as to costs.

(4)     Where an order as to costs is made against the Registrar under subsection (3), such costs shall be payable out of the general revenue and the Registrar shall not be liable personally therefor.

…”

23.  Section 349A(2), which is relied on by the Registrar in refusing the Company’s request to withdraw the Form F3 registered and to register the documents referred to, reads as follows:

“Any person who wilfully or maliciously destroys, removes, alters, defaces or conceals any register, book or document belonging to, or filed or deposited in, the office of the Registrar shall be guilty of an offence and liable to imprisonment and a fine.”

24.  There are no provisions in the relevant legislation in the United Kingdom equivalent to sections 348 and 349A.

The issues in dispute

25.  As mentioned earlier, the Registrar has taken no point for the purpose of this application that the Form F3 filed on 24 December 2003 was filed in error.  What then are the obstacles to granting relief to the Company?

26.  Mr Beresford, appearing for the Registrar, submitted that the Registrar was justified in rejecting the requests of the Company to withdraw the Form F3 and to register the additional documents under section 348(1).  He contended that the court has no jurisdiction to grant relief to rectify the oversea register by removing the Form F3 mistakenly filed or by ordering the Registrar to accept for registration additional documents which would have the effect of altering the Form F3.  The Registrar is concerned to protect the integrity of the register.  The proper course for the Company is to file a new Form F3 to revert to the original authorised representative by re-appointing Mr Ko in the place of Mr Wang.

27.  Mr Yu, appearing for the Company, submitted that the course proposed by the Registrar is not the proper one.  If a return were to be filed notifying the re-appointment of Mr Ko as an authorised representative, this would not be correct as Mr Ko has not previously retired.  It would be tantamount to admitting something untrue to be true and could result in prejudice to the Company in the criminal proceedings brought by the Registrar against the Company in the magistrates’ courts.  For a return under section 335(1)(c) to be registered, there must first be an alteration in the particulars of the authorised representative.  As there has been no alteration in the status of Mr Ko as an authorised representative, the Registrar was under no duty to register the Form F3 mistakenly filed.  Mr Yu contended that the court does have jurisdiction to grant the relief sought, on the basis of inherent jurisdiction and, as a fallback position, under section 348(3).

Does the court have jurisdiction to grant relief

28.  I will deal with the question of jurisdiction first.

29.  The Company’s primary submission is to invoke the inherent jurisdiction of the court.  I was referred by Mr Yu to section 12(2) of the High Court Ordinance, Cap. 4, Halsbury’s Laws of England, Vol. 37, 4^th ed reissue, para. 12 and the case of Re Calmex Ltd. [1989] 1 All ER 485.

30.  Regarding the passage in Halsbury on the inherent jurisdiction of the court quoted by Mr Yu, I think it pertinent to note the following sentence as pointed out by Mr Beresford, which is in the same extract: “The overriding feature of the inherent jurisdiction of the court is that it is a part of procedural law, both civil and criminal, and not a part of substantive law.”  I agree with Mr Beresford that the doctrine of inherent jurisdiction cannot be invoked to confer substantive rights, such as a right to rectify the register maintained by the Registrar.

31.  In Re Calmex, a winding-up order that was made by mistake was rescinded by the court, but the order remained on the register kept by the Registrar of Companies, who was opposed to the removal of the winding-up order for reasons that are not necessary to go into.  The Registrar also took the point that the court would have no jurisdiction to order him to remove documents from the register.  Hoffmann J had this to say when he rejected this submission at 488g to j:

“Finally, counsel for the registrar submitted that the court had no jurisdiction to tell the registrar to remove documents from the register.  I would be surprised if a company had no remedy against the registrar if he chose to include in the file a document which was prejudicial to the company and which he had no statutory duty to keep.  And I have held that, on the true construction of s 130(1) of the 1986 Act, the registrar has no duty to retain entered in his records a winding-up order which the court has declared to be a nullity.  I suspect that the remedy would be by way of judicial review, but counsel for the registrar said that the registrar did not wish to take any point on the procedure by which the matter has been brought before the court, but contended that even by way of judicial review there was no jurisdiction.  In my judgment the court does in principle have jurisdiction according to public law principles to control the way in which the registrar carries out his statutory duties, subject to any specific exclusions of that jurisdiction or the evidence on which it could be founded, as in R v Registrar of Companies, ex p Central Bank of India [1986] 1 All ER 105, [1986] QB 1114.  I will therefore make an order that the winding-up and stay orders be removed from the registrar’s files, subject, if the registrar thinks it desirable, to their replacement by a note in terms on which I shall invite the views of counsel.”

32.  Re Calmex was considered in some detail in two decisions cited by Mr Beresford, so the effect of the above passage in the judgment of Hoffmann J should be fairly clear.  Although the fact situations in those two decisions, igroup Ltd. v Ocwen [2004] 1 WLR 451 andRe Company No. 1389920 [2004] BCC 288, are distinguishable from our case, what is pertinent for present purpose is that Re Calmex was relied on by the applicant in those two cases to support a contention that the court should have inherent jurisdiction to order the Registrar of Companies to rectify the documents held in the registry.

33.  In igroup Ltd, Lightman J rejected the submission that Re Calmex is authority for the proposition that the court has an inherent jurisdiction to order the Registrar to rectify documents held in the registry.  In that case, it was held that the limited jurisdiction to rectify mistakes in the entry of any particular with respect to a mortgage or charge under section 404 of the Companies Act 1985 (equivalent to our section 86) does not extend to correcting mistakes otherwise than in a particular entered on the register and that the existence of the limited jurisdiction to rectify in section 404 is inconsistent with the existence of a general and unlimited inherent jurisdiction to rectify.  The judge pointed out at 461B to C that what was decided in Re Calmex was that the Registrar had a statutory duty to remove from his records a document which was a nullity and the court in the exercise of its supervisory jurisdiction would enforce that duty.  It was not a case dealing with the situation whether it might be permissible to order the Registrar to rectify or alter a valid document which had been duly delivered and properly relied on by the Registrar in the discharge of his statutory function to retain as part of the Registrar’s records available for public inspection.  At 460D to E, Lightman J had this to say:

“The Calmex case merely established (if ever authority were required for the proposition) that the court has a supervisory jurisdiction over the registrar and can in judicial review proceedings make orders enforcing the performance by the registrar of the registrar’s public duties.”

34.  Peter Leaver QC, sitting as a deputy judge of the High Court, took a similar view in Re Company No. 1389920.  In that case, the company applied for an order under the court’s inherent jurisdiction to file revised accounts with the Registrar of Companies in substitution for the accounts and reports of the company already filed for a financial year.  In dismissing the application, the judge held that there is no inherent jurisdiction to permit the filing of revised accounts.  The relevant passages are at 296G to H and 297G to H:

“40.      As I understand Hoffmann J’s judgment, he is not recognising the existence of some general and unlimited jurisdiction to supervise the registrar, but simply the jurisdicition, which is to be exercised ‘according to ordinary public law principles’, to require the registrar to perform his (or her) statutory duties so as not, in that case, to permit the wrong that had been perpetrated on a company to continue.  Hoffmann J decided either (and, in my judgment, it matters not which formulation is adopted) that the registrar had no statutory duty to retain on the register an order which was a nullity, and that she should not do so, or that the registrar was under a statutory duty to remove a nullity from the register, and should, if necessary, be ordered to do so by the court in the exercise of its supervisory jurisdiction to ensure that there was compliance with statutory duties.

41.        Re Calmex is not, in my judgment, authority for the proposition that there is an inherent, supervisory jurisdiction to require or permit the rectification of any document or record that contains an error or some extraneous material, but which is otherwise filed in compliance with a statutory duty.  In other words, Re Calmex is not authority for the proposition that a document or record that contains an error or some extraneous or superfluous material becomes, by that inclusion, a nullity and ceases to be properly filed, so that the registrar has no statutory duty to retain it on the record or that she is under a statutory duty to remove it.”

“46.      In the result, therefore, the position is that I have not been referred to, and have not found any authority for the proposition that there is a general, inherent supervisory jurisdiction in the court in relation to the performance by the registrar of her duties, nor, in my judgment, is there such a jurisdiction.  At most, there is a jurisdiction to require the registrar to comply with her statutory duties (see Re Calmex), but that is not the jurisdiction which the company seeks to enforce in the present case.  The company accepts that the registrar has complied with her statutory duty in relation to the filed accounts, but seeks, in similar way as did the claimant in iGroup, the removal of extraneous or superfluous material.  It does not seem to me to make a significant difference to the application that in the present case the extraneous or superfluous material is contained in the body of the filed document whereas in iGroup the material was contained in schedules annexed to the filed document.  In each case there has been a proper filing and a proper performance by the registrar of her statutory duties.”

35.  I should also mention that in the postscript of the judgment in Re Company No. 1389920, the judge was careful to say at 299F to H that the judgment is confined to the facts giving rise to the claim and should not be given “any wider import”.  While he is in no doubt there is no inherent jurisdiction to permit the revision of the filed accounts in the case before him, “situations might arise in which the registrar’s statutory duty might come into conflict with a third party’s common law or statutory rights”; “effective relief” that might be granted in such situations could involve ordering the Registrar to permit the removal of the offending part of the accounts or to permit the replacement of the accounts by new accounts.

36.  I do not think Re Calmex would provide support for the proposition that the court has inherent jurisdiction to grant the reliefs sought in this application, nor do I think it necessary to invoke the inherent jurisdiction of the court in this instance, as was also recognized by Mr Beresford.  Section 348(3) provides that where a person is aggrieved by a decision of the Registrar under subsection (1), on appeal to the court against the decision, the court may, subject to subsection (4), “make such order as it may deem just, including an order as to costs”.  This provision is couched in wide terms, enabling the court to grant such relief as it may deem just, provided of course that the court is satisfied that the decision of the Registrar is in error.

37.  Mr Beresford submitted that although section 348(3) confers an apparently wide power on the court, this would not extend to a power to rectify the register, as Cap. 32 makes express provision for a power of rectification in appropriate instances, and one example is section 86(1) mentioned earlier.  He prayed in aid Exeter Trust Ltd. v Screenways Ltd. [1991] BCC 477 at 482G to 483B, which was considered in igroup Ltd. and Re Company No. 1389920, as support for the proposition that the existence of a limited jurisdiction to rectify is inconsistent with a general and unlimited jurisdiction to rectify.  I do not think the situations in Exeter Trust Ltd. and igroup Ltd are comparable to the present situation, as the rectification sought in those cases related to the removal of registration of a charge and the deletion of certain particulars entered with respect to a charge, for which an express and restricted power to rectify the register of charges is provided in section 404 of the Companies Act.  Here, no express provision is made for a specific power to rectify the register maintained by the Registrar.

38.  Mr Beresford further submitted that the power in section 348(3) should not extend to directing the Registrar to act in a manner which is outside his statutory functions, such as to act inconsistently with section 349A(2).  He cited Halifax plc v Halifax Repossessions Ltd. [2004] BCC 281 in which the English Court of Appeal held that an order directing the Registrar to change the names of certain companies notwithstanding that the companies had not passed special resolutions for that purpose, as is required under section 28 of the Companies Act 1985, was inappropriate.  Arden LJ had this to say at 287B:

“As I see it, the only functions of the registrar of companies are those which are conferred on her by statute.  While it may well be that the court could in an appropriate case direct the registrar of companies to do something which was incidental to discharge those functions, the court, in my judgment, cannot properly direct the registrar of companies to do something outside the functions which are expressly conferred on her by the Companies Act 1985.”

39.  Section 349A(2) provides for a criminal offence where a person “wilfully or maliciously … removes, alters … any document … filed or deposited in, the office of the Registrar”.  I do not think this should be construed as a blanket prohibition against the Registrar from removing or permitting the alteration of a document filed in the Companies Registry, where just cause is shown.  If in an appropriate case the court should direct the Registrar to remove a document from the register or to accept a document for registration, the Registrar is not directed to act in a manner that is not in compliance with statutory provisions.  I also understand from Mr Beresford that where the Registrar discovers an error in the form or substance of a document filed, the Registrar does, in some circumstances, accept for filing an explanatory or “correction” letter.

40.  I rule that section 348(3) does confer power on the court to grant the reliefs sought in this application.

Is the Registrar’s decision in error

41.  Mr Beresford advanced a number of grounds in support of his contention that the Registrar’s decision to refuse the request of the Company to withdraw Form F3 and to file further documents to explain and clarify the mistake in filing the same is not in error but is in accordance with the law.  He contended that the documents delivered by the Company for filing are “manifestly unlawful or ineffective” within section 348(1) (a).

42.  I will first deal with the submission that the explanatory letters of the Company and its solicitors, as well as the statutory declaration of Mr Ko, which the Registrar has refused to accept for filing, are “manifestly unlawful”.  This is based on the contention that the documents contravene the prohibition in section 349A(2) in that they alter the effect of the Form F3 filed in December 2003.  As mentioned earlier, the Registrar does, on occasion, accept for filing an explanatory or correction letter.  I have held that the provision of a criminal offence in section 349A(2) for an act done “wilfully or maliciously” should not be construed as a prohibition against the alteration of a document filed in the Registry where the alteration is made with the permission of the Registrar on just cause being shown.

43.  This leaves the contention that the documents sought to be filed for registration are “manifestly ineffective”.  Mr Beresford submitted that these documents could serve no purpose and would only generate confusion.  The registration by an oversea company of a name and address for service constitutes a representation to the public that the authorised representative is authorised to accept service.  This creates an apparent authority and whether the authorised representative did have actual authority is irrelevant; the company will not be permitted to deny the authority with respect to any one serving process or notice on the faith of the representation (Bank Negara Indonesia, supra.; Employers’ Liability Assurance Corporation, supra.).  Any member of the public could have relied on the Form F3 filed in December 2003.  An attempt to withdraw or alter the representation made by the Form F3 (that Mr Ko had resigned as authorised representative on 1 April 2001 and Mr Wang was appointed in his place the same day) cannot be effective against any one who had effected service on the faith of the representation.  As for the removal of the Form F3, which has remained on the register for nine months, this would only cause confusion.

44.  I think there is substance in these submissions.  The undertaking offered by the Company that it would not challenge the validity of service of documents on the Company if the party effecting service had relied on the information contained in the Form F3 before the withdrawal or correction thereof by an order of the court would seem to be a tacit acceptance that any withdrawal or correction of the Form F3 cannot alter the legal position of the representation made.  The Form F3 filed by the Company does have a legal consequence and purpose notwithstanding it was mistakenly filed.  Notwithstanding the mistake, the Company is bound by the representation made in the Form F3 in holding out Mr Wang to be an authorised representative in the place of Mr Ko.  The present situation is not analogous to the situation in which a document filed is subsequently held to be null and void and of no effect. 

45.  I am not persuaded the Registrar’ decision to refuse registration of the explanatory letters and the statutory declaration is erroneous in this situation.  I therefore dismiss the application with costs to the Registrar.