MAK SIK BUN AND OTHERS v. MAK LEI WUN AND OTHERS

HCCW 624/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 624 OF 2003

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J U D G M E N T

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Introduction

1.  Mr Mak Hon Fun (“the Grandfather”) was a successful businessman in Hong Kong and Macau.  By the time of his death in 1984, he had built up a sizeable fortune, from the operations of a fireworks factory in Macau and through investments in property both in Hong Kong and Macau.  During his lifetime, he was married twice.  His first wife was Madam Yip Siu Ngan (“Madam Yip”).  His second wife (who had formerly been his concubine) was Madam Ho Lou Ping (“Madam Ho”), who was referred to in these proceedings as the “small Grandmother”.  He did not have many children, having but one son, Mr Mak Po Kwong, with Madam Yip and one daughter, Ms Mak Mo Ching (“Ms Mak”), with Madam Ho.  However, through his son (who was married and also had two mistresses) he had twelve grandchildren, ten of whom are, together with his daughter, Ms Mak, parties to this petition.

2.  The descendants of the Grandfather who are parties to this petition are:-

(1)	The 1st Petitioner, Mr Mak Sik Bun (“John”), who is the third son (and third child) of Mr Mak Po Kwong and his wife, Madam Ip Wai Yeu (“Madam Ip”);
(2)	The 2nd Petitioner, Ms Mak Wan Wah Ada (“Ada”), who is the second daughter (and fifth child) of Mr Mak Po Kwong and Madam Ip;
(3)	The 3rd Petitioner, Ms Mak Sin Wah Sandy (“Sandy”), who is the third daughter (and sixth child) of Mr Mak Po Kwong and Madam Ip;
(4)	The 4th Petitioner, Ms Mak Maily (“Maily”), who is the youngest daughter (and eighth child) of Mr Mak Po Kwong and Madam Ip;
(5)	The 5th Petitioner, Ms Mak, who is, as I have said, the Grandfather’s daughter by Madam Ho;
(6)	The 6th Petitioner, Mr Mak Ho Keung (“Keung”), who is the son of Mr Mak Po Kwong and his first mistress;
(7)	The 7th Petitioner, Mr Mak Ving Vunk (“Victor”), who is the son (and elder child) of Mr Mak Po Kwong and his second mistress;
(8)	The 8th Petitioner, Ms Mak Tin Sum (“Tin Sum”), who is the daughter (and younger child) of Mr Mak Po Kwong and his second mistress;
(9)	The 9th Petitioner, Ms Mak Wai Wah Winnie (“Winnie”), who is the first daughter (and fourth child) of Mr Mak Po Kwong and Madam Ip;
(10)	The 1st Respondent, Mr Mak Lei Wun (“Larry”), who is the second son (and second child) of Mr Mak Po Kwong and Madam Ip; and
(11)	The 2nd Respondent, Mr Mak King Mun Philip (“Philip”), who is the fourth son (and seventh child) of Mr Mak Po Kwong and Madam Ip.

3.  Grandfather Mak appears to have attached some importance to traditional Chinese custom, and a few years prior to his death, on 2 January 1980, he caused a company called Mak Shing Yue Tong Limited (“the old company”) to be incorporated.  The objects clause of its Memorandum of Association included (apart from a variety of objects which are found in standard objects clauses and which gave it the power to do almost anything) two specific objects (specified in clauses 3(1) and (2)) which indicated that its purpose was to provide assistance to his descendants who were in need of it.  It is, I think, common ground between the parties that he envisaged that it would operate in a manner broadly similar to a traditional Tong.  When the old company was incorporated, its first directors were the Grandfather, Larry and John.  Subsequently, the eldest grandson Mr William Mak (“William”) (who is not a party to these proceedings, and does not appear ever to have taken any great part or interest in the affairs of the old company) and Philip became directors of the old company as well.  After the Grandfather’s death in 1984, Larry, John, William and Philip remained as directors of the old company until its dissolution in 1993.  The subscribers to the Memorandum of Association of the old company were the Grandfather and Larry.  Later, a total of 900 shares were issued in the old company, of which 300 were held by the Grandfather, and 200 each by Larry, John and Philip.  On the Grandfather’s death, his 300 shares became vested in Larry as the executor of his estate.

4.  The old company had some assets, principally a piece of property (which was the home of the Grandfather and Madam Ho) and cash in the form of fixed deposits.

5.  On 9 February 1993, the company which is the subject of this petition, Mak Shing Yue Tong Commemorative Association Limited was incorporated.  In its Memorandum and Articles of Association, it is referred to as “the Tong”, and I shall refer to it in that way also.  It seems that the Tong was incorporated on the advice of a Mr Yiu Hon Lam (“Mr Yiu”), an accountant (who had apparently also qualified as a barrister) who advised and acted for the Mak family.  Mr Yiu thought that having regard to the objects of the old company, it would be more appropriate for them to carried out through a company limited not by shares, but by guarantee.  Acting on Mr Yiu’s advice, the Tong was incorporated, and the old company wound up, its assets being transferred to the Tong with the agreement of Larry, John and Philip, who were at the time the old company’s shareholders.

6.  As a company limited by guarantee required seven subscribers on formation, Madam Ip, Ada, Sandy and Maily subscribed to the Tong’s Memorandum and Articles of Association, together with Larry, John and Philip.  They are, up to now, its only registered members.  Its affairs were managed by an Executive Committee of three members.  From the outset, the members of the Executive Committee have been Larry, John and Philip.

7.  There does not appear to be much doubt that at first its affairs ran smoothly.  Its principal activities were, according to all the witnesses, to arrange for ancestor worship (of the Grandfather and others) and to organise family gatherings and meals.  No doubt because all the family members were comfortably off, it did not (and has not so far) provided any financial assistance of any form to any of them, as it is empowered by its Memorandum of Association to do.

8.  Unfortunately, in about 2001, relations between the grandchildren began to deteriorate.  It will be necessary to look at the way in which matters developed in more detail below.  The end result was that the Petitioners presented their petition in these proceedings on 5 June 2003.  Although the petition was presented pursuant to both section 177(1)(f) and section 168A of the Companies Ordinance (“the Ordinance”), the only relief expressly sought in the prayer of the petition as presented was an order for winding up on the just and equitable ground.  No specific relief was identified as being sought in the alternative pursuant to section 168A.  However, on the first day of the trial, Mr Chan SC, appearing for the Petitioners, sought to re-amend the petition to seek, as an alternative to winding up, first, an order that certain amendments to the memorandum and articles of association of the Tong effected on 2 July 2002 should cease to have effect so that the memorandum and articles of association should revert to their previous form, and, second, an order that the 5th to 9th Petitioners (who claim to have been admitted as members of the Tong, but were never registered as such, and whose membership was subsequently purportedly revoked by a resolution of the Executive Committee of the Tong) should be restored as members of the Tong forthwith.  I granted leave to re-amend, noting the submission of Mr Ng SC, appearing for Larry and Philip, that the re-amendments might have an impact on the costs of the proceedings if the Petitioners were to succeed only in obtaining the relief prayed for in the amendment at the end of the day.

The complaints in the Petition

9.  There are four principal areas of complaint made in the re-amended petition.  These are:-

(1)	The failure of the Tong and its company secretary, Certified Management Consultants Limited (“CMC”) (a company secretarial business run by Mr Yiu) to supply copies of minutes of meetings of members and of the Executive Committee of the Tong to John pursuant to a written request made by him to CMC on 7 April 2003;
(2)	In relation to the Tong’s bank accounts with the Bank of America (Asia) Limited, complaint is made about:-
	(a)	The act of Larry and Philip in changing the correspondence address for the Tong’s bank accounts from John’s office to its registered office (CMC’s address), without first informing John; and
	(b)	the alleged deliberate exclusion by Larry and Philip of John from signing the Tong’s cheques from May 2003 onwards - it was alleged that prior to then, cheques had generally been signed by Larry and John;
(3)	Amendments made to articles 38, 40 and 53 of the Tong’s Articles of Association, which had the effect of entrenching Larry, John and Philip as permanent members of the Executive Committee, making it more difficult to remove them, and making it more difficult for female members of the Tong to become Executive Committee members, are said to be unfairly prejudicial to various of the Petitioners; and
(4)	Notwithstanding the approval on 26 June 2002 by the Executive Committee of applications by Ms Mak, Keung, Victor, Tin Sum and Winnie for membership of the Tong, they were not given notice of admission or provided with membership cards, despite requests made to CMC, and their membership was wrongfully revoked by Larry and Philip at an Executive Committee meeting held on 30 March 2003.

10.  As will become apparent, although these matters are referred to separately, they were in fact related, having their origins in the same background matters.

The witnesses

11.  At the trial, evidence was given for the Petitioners by John, Ada, Ms Mak and Keung, all of whom had made one or more affirmations for the purposes of the proceedings.  Affirmations were also made by the other petitioners, but they were not called at the trial.  So far as the Respondents were concerned, both Larry and Philip gave evidence at the trial, having earlier made several affirmations each.  The Tong, as is usual in such proceedings, was not represented at the trial.

The constitution of the Tong

12.  A convenient starting point is, I think, the objects of the Tong which are set out in the third clause of its Memorandum of Association.  So far as material, these are as follows:-

“(1)	To unite, encourage and foster the bonds of friendship among people with the common Surname “Mak” ... who originate from the late Mak Hon Fun and also their dependants.
“(2)	To maintain ancestral tablets and worship ancestors.
“(3)	To provide a living place or places for the members and their dependants of the Tong, who are in need of assistance for their accommodation (this clause was subsequently amended on 2 July 2002, so that the last phrase reads “who are in financial difficulties”, but nothing turns on this change).
“(4)	To grant relief, by means of pecuniary or other assistance to the members and their dependants of the Tong who are in need of financial assistance.
“(5)	To grant assistance to the members and their dependants of the Tong for their maintenance or education, who are in need of assistance for their maintenance or education.
...
“(9)	To act as arbitrator in and otherwise to assist in the settlement of disputes and difficulties rising (sic) between members.
“(12)	To provide a meeting place or meeting places for the members and their dependants and to bring together persons by co-operation and mutual exchange of ideas and to advance the interests of the members.”

13.  It is also pertinent to note the provisions of the fourth and seventh clauses of the memorandum of association.  The fourth clause prohibits the payment or transfer of any of the income or property of the Tong to its members.  The seventh clause provides that in the event that the Tong is wound up or dissolved, any surplus assets are not to be distributed to its members but are to be given to some other institution with objects similar to those of the Tong, with similar prohibitions on distributions to members, or failing that, to some charitable object.

14.  So far as the articles of association are concerned, the following are relevant.  Where they were amended on 2 July 2002, the amendments are as indicated below:-

“4.	The subscribers to the Memorandum of Association and such other persons as the Executive Committee shall admit to membership shall be members of the Tong.
“5.	All persons being lineal descendants of the late Mak Hon Fun and with the common surname “Mak”, no matter they are residents of Hong Kong or overseas, shall be eligible to apply as members of the Tong, provided that they are people of upright character, who accept the objects of the Tong and observe the Tong’s regulations.
...
“7.	Every such application for membership shall be made in writing and signed by the candidate and by his sponsor and shall be in such form as the Executive Committee may from time to time prescribe.  Such application shall be considered by the Executive Committee which may approve or reject the same without assigning any reason therefor.  Upon such application being approved by the Executive Committee, the applicant shall become a member of the Tong.
“8.	Upon admission as a member of the Tong, the Secretary shall give notice thereof to such member and shall send a copy of the Memorandum and Articles of Association of the Tong and a membership card to such member.
“9.	If any member violates the Articles of Association or the bye-laws of the Tong or if his conduct shall in the opinion of the Executive Committee be injurious to the character or interests of the Tong, a meeting of the Executive Committee shall be specially summoned to consider the case.
“10.	If the member complained of shall not explain his conduct to the satisfaction of the Executive Committee they shall call upon such member to resign within one month and should he not do so his name shall be erased from the list of members and he shall ipso facto cease to be a member of the Tong.
...
“37.	The Tong shall have an Executive Committee consisting of three members.
“38.	In case of casual vacancy occurring in the Executive Committee such vacancy shall be filled by a male member of the Tong attaining the legal age of a director of a company registered under the Hong Kong Companies Ordinance, or a female member of the Tong with unanimous approval of all the continuing Executive Committee members.  The member who fills such vacancy shall hold office only until the conclusion of the forthcoming Annual General Meeting.
“40.	Messrs. Mak Lei Wun [Larry], Mak Sik Bun [John] and Mak King Mun, Philip [Philip] shall be the permanent members of the Executive Committee unless any event specified in Articles 53 and 54 shall have happened.  The term of office of an ordinary member of the Executive Committee aforesaid shall be one year, but a retiring member shall be eligible for re-election.
“53.	The office of a member of the Executive Committee shall ipso facto be vacated if he:-
	(a)	becomes bankrupt; or
	(b)	is found lunatic or becomes of unsound mind; or
	(c)	resigns his office by notice in writing to the Tong; or
	(d)	ceases to be a member of the Tong;
	(e)	is removed by an Extraordinary resolution passed at a general meeting.
“54.	If any member of any Committee during his term of office shall injure the name of the Tong or prevent the proper conduct of the affairs of the Tong or embezzle any of the funds of the Tong, the Tong may by an extraordinary resolution remove such member before the expiration of his term of office and may by an ordinary resolution appoint another person in his stead.”

The facts

15.  As I have said, initially, there were no problems with the running of the Tong.  It organised regular family gatherings and dinners, and ancestor worship trips to which the members were invited.  It would appear that Ms Mak and some of the other grandchildren of the Grandfather who were not members of the Tong were invited to some of such gatherings as well.

Disputes between Philip and his siblings

16.  However, from about the first part of 2001 onwards, things took a turn for the worse.  It was common ground that from that time, disputes began to arise between Philip on the one hand and Ada and John on the other.  By just before the middle of the year, an issue had arisen between Ada and her sisters on one side and Philip on the other in relation to money belonging to Madam Ip, which was to lead to litigation being commenced on 5 December 2001 against Philip by Ada (claiming to be the next friend of Madam Ip) seeking repayment of monies allegedly extracted from Madam Ip’s bank accounts by Philip at a time when Ada contended that Madam Ip was not capable of managing her own affairs.  Subsequently, the Official Solicitor was brought into the proceedings, and replaced Ada as Madam Ip’s next friend.

17.  A dispute also arose between Philip and John in relation to a company called Poly Star (Hong Kong) Limited (“Poly Star”), which was beneficially owned by John.  It appears that certain property of Poly Star was held by Philip on trust for Poly Star.  When called upon to deal with the property, by transferring it to a BVI company to be incorporated with Philip as its sole shareholder and director, Philip did not do so immediately.  This led to proceedings between Poly Star and Philip, which Philip initially indicated he would defend.  Eventually, he agreed to and did retransfer the property in question to Poly Star.  It appears that John’s objective may have been to minimise his tax liabilities, but that Philip became concerned about the tax implications for himself.  It also appears that Philip did not at any time suggest that the property was held otherwise than on trust by him.

18.  Regardless of the rights or wrongs of these matters, it is clear that they resulted in a degree of tension or ill-feeling arising as between Philip and John and Philip and Ada and his sisters.

Application for membership by Philip’s children

19.  In about July 2001, Philip caused his son and daughter to apply for membership of the Tong, notwithstanding that they were both under the age of 18.  The applications were made on application forms which Philip said he simply produced himself on his computer.  The forms provided for the identity card number and address of the applicant to be supplied.  The applications were unanimously approved by Larry, John and Philip at a meeting of the Tong’s Executive Committee on 6 August 2001.

Ms Mak’s unhappiness with Philip

20.  This meeting also dealt with a number of other matters.  It was resolved that rental payments that had previously been made to a company called Jumbo Way Consultants Limited in respect of Madam Ho’s residence were to be stopped, and that a salary which had for some time been paid to Madam Ho was also to be terminated.  It was common ground that after the death of the Grandfather, Madam Ho continued to live in the home which she had shared with the Grandfather, a property owned by initially the old company and later the Tong.  Ms Mak said in her evidence that a time came when owing to Madam Ho’s advancing age (she was about 93 at the time of the trial), she felt it would be more desirable for her to stay in a more modern building with a lift.  Ms Mak owned (through Jumbo Way, a company of which she was the beneficial owner) a flat in the same building in which she herself lived, which she had previously rented out, but which had become vacant, and she thought that this would be a suitable home for her mother.  The result was that the property owned by the Tong became vacant, and was subsequently let out by the Tong.  Ms Mak proposed that the Tong should pay Jumbo Way rent in the same amount as the rent it was receiving for its property, and this was agreed to.  So far as the salary was concerned, Ms Mak said that this was a payment to enable Madam Ho to employ a maid to look after her, as the Grandfather had wanted this to be done.

21.  The reasons for these payments being terminated was investigated with the witnesses.  John said that this was Philip’s idea, and that he, John, was opposed to it.  Larry was somewhat less forthcoming, but made it clear that it was not his own idea, although he went along with it.  Philip did not really dispute that he raised the suggestion, although he said that all three brothers agreed at the time on this course of action.  Philip’s explanation was that by that time, substantial distributions had been made from the Grandfather’s estate, and he felt that there was no longer any reason why funds of the Tong should be continued to be spent on Madam Ho.  Again, the rights and wrongs of this matter are not of particular relevance, but it is clear that Ms Mak regarded the decision as an ungenerous one, and was not happy about it.  It also was clear from her evidence that she regarded Philip, and perhaps to a lesser extent, Larry, as being the persons primarily responsible for the decision.

The role of women in the Tong

22.  The record of this meeting also recorded that it was resolved that “in accordance to the original desire and instruction from the late Mak Hon Fun, only a male descendant of Man Hon Fun with the surname “Mak” is eligible to be elected as an Executive Committee member”.  This resolution had its origin in an attempt by John to resign as a member of the Executive Committee.  At first, he had proposed that Sandy should become a member of the Executive Committee in his place, and this was agreed to by Larry.  However, Larry subsequently changed his mind and indicated that only a male member of the Mak family over the age of 18 should be eligible to be a member of the Executive Committee.  When asked about the reasons for this change of mind, Larry said that Philip had reminded him that it would not have been in accordance with the wishes of the Grandfather for a woman to be involved in the management of the Tong’s affairs.

23.  This topic, too, was explored with the witnesses.  John did not agree that this was in fact the Grandfather’s wish.  Larry and Philip both insisted that it was.  They relied on a note written by the Grandfather in 1980, a few years before his death, in which he expressed the wish that the old company should be managed by Larry, John and Philip.  It is, I think, tolerably clear from the note that the Grandfather did hope that the three brothers would take up the management of the old company after his death.  However, it does not seem to me to follow that he necessarily did not wish to have any of his granddaughters involved in its management.  John pointed out that Ada had acted as the company secretary of the Tong for some years prior to 2001 (she was in fact replaced as such secretary by Philip at this meeting), and said that this was inconsistent with it having been the Grandfather’s intention that women should not be involved in its management.  Larry and Philip sought to play down the importance of this, saying that Ada’s role involved little more than making arrangements for dinners and transportation for ancestor worship outings.  However, it seems to me that the fact that Larry and Philip were content to have Ada occupy the role of company secretary is inconsistent with their position as to the Grandfather’s wishes, and I am not satisfied that the Grandfather did in fact express any such wish.

24.  John then proposed that Victor should take his place, but this too was apparently not acceptable to Larry and Philip.  Although he said that his recollection as to this was not clear, Larry accepted that if he had rejected this suggestion, it would have been because he wished to retain the management of the Tong in his and Philip’s hands.

Larry’s sons’ applications for membership

25.  On 8 August 2001, Larry’s two sons, both of whom live abroad, applied for membership of the Tong as well.  Their applications were made on forms similar to those submitted by Philip’s children, and were later approved unanimously by Larry, John and Philip.  It is to be noted that although addresses were given for each of them, the addresses given were not their own residential addresses (which were outside Hong Kong), but were in fact Larry’s residential address in Hong Kong.

26.  Larry and Philip were asked about the reasons why their children applied for membership of the Tong at this time.  Philip sought to suggest that there was no particular significance to this.  He said that he simply thought that it would be a good idea for his children to become members, as they were eligible to do so.  He accepted that at this time, his relationship with his sisters was beginning to deteriorate, as a result of the dispute over his mother’s affairs.  He pointed out, however, that in any event, being underage, they could not vote.  However, when cross-examined, he eventually accepted that he did not consider this at the time.

27.  So far as Larry’s sons were concerned, Larry said that it was Philip who suggested that he should get his sons to apply for membership of the Tong.  He said also that he believed that the reason for this was because Philip was becoming concerned as to his own position, and wished to protect his position as an Executive Committee member by bringing in as members persons who might be sympathetic to him.  Larry said that this concern was, to his mind, due to the disputes which were brewing with Ada.  Larry said that he was concerned about the position, and that he did not want to see Philip or himself voted out of office.  He justified this by saying that this was in it had been the wish of the Grandfather that they should manage the affairs of the old company and thus also those of the Tong, its successor.

28.  Philip was somewhat cagey in his answers to questions about why Larry’s sons were caused to apply for membership.  However, considering his evidence as a whole, I am satisfied that although he was anxious to suggest that there was no certainty that he would get their support for his continued membership of the Executive Committee, this hope (to put it no higher) was a factor in his mind.

29.  I am therefore satisfied that the motivation for causing Larry’s sons to apply to become members of the Tong was as stated by Larry.  Quite apart from the fact that Larry’s evidence as to this was clear, it does appear that disputes were blowing up within the family.  John had tried unsuccessfully to resign and put forward Sandy or Victor as his replacements, friction was arising in relation to the situation with Poly Star, Ada and her sisters were making complaints in relation to the handling of their mother’s affairs, and Ms Mak and John were not happy about the decision to cease providing support for Madam Ho.  In these circumstances, it is not particularly surprising that Philip and Larry would have been concerned as to their position, and anxious to bolster it in whatever ways possible.

Applications for membership by the 5^th to 9^th Petitioners

30.  Thereafter, in November and December 2001, Ms Mak, Keung, Victor, Tin Sum and Winnie applied to become members of the Tong.  All of their applications were sponsored by John.  According to Larry, this presented a problem, because Philip and John were then engaged in legal proceedings in relation to Poly Star, and Philip and Ada were about to be engaged in litigation about their mother’s affairs.  Larry said that he was convinced that John had sponsored the applications with a view to voting Philip off the Executive Committee, and that this was unfair to Philip, and against the Grandfather’s wishes.

31.  Philip also said that he did not think that their applications were made in good faith.  He said that he thought that they were siding with John and Ada, so that they could take over control of the Tong.  However, although he said that Winnie was allied with Ada in relation to the litigation on behalf of Madam Ip, and that Ms Mak was unhappy with him because of the termination of the rental and salary arrangements for the benefit of Madam Ho, he could not put forward any reason why, at that stage, Keung, Victor or Tin Sum should have any grudge against him.

32.  It was also suggested that it was not necessary for them to apply to join the Tong, as they had always been invited to participate in activities such as meals, gatherings and ancestor worship despite not being members.  However, it is clear from the objects clause in the memorandum of association of the Tong that the financial benefits available to family members in need were only to be made available to members and their dependants.  In these circumstances, given that Larry’s and Philip’s children had become members, there is nothing particularly surprising in other family members wishing to join as well, even if part of their motivation might have been to even out membership between those regarded as allied with Larry and Philip, and the others.

33.  Their applications came up for consideration at an Executive Committee meeting on 27 December 2001.  The applications were not dealt with.  Instead, it appears to have been decided that there should be a cooling off period of six months.  It is not clear whether it was envisaged that the applications would be dealt with then (the paragraph of the minutes dealing with this was crossed out), but the idea of a cooling off period is clearly recognised in other parts of the minute.  It seems that it was also envisaged that there might be separate family gatherings during this period.

34.  The next meeting of the Executive Committee was on 8 March 2002.  At this meeting, it appears that the memorandum and articles of association were examined with the assistance of Mr Yiu, and that the amendments which I have set out above were proposed by Philip.  So far as the proposal to entrench the three brothers as members of the Executive Committee was concerned, this was sought to be justified, not on the basis that this was the wish of the Grandfather, but on the basis that they were the founders of the Tong, having provided it with its assets from the old company of which they were the sole shareholders.  It was resolved that an Extraordinary General Meeting of the Tong should be convened with a view to effecting the proposed amendments.  It was also resolved that the five pending applications for membership “would be approved after the change [to the Tong’s constitution] taking their statutory effect (sic)”.

35.  Another meeting of the Executive Committee was held on 26 June 2002.  Keung had at this point requested approval of his and the other applications prior to the holding of the intended Extraordinary General Meeting to consider the changes to the memorandum and articles of association.  Philip, however, took exception to this, taking the view that it was unacceptable for an applicant to seek to persuade the Executive Committee to overturn a decision which it had already made.  He also sought to defer further consideration of the applications until all litigation between himself and his siblings had been resolved, complaining about the bringing of the Poly Star litigation, and about an incident involving Victor, who had invited Philip, Madam Ip and some of the other siblings to a Mother’s Day dinner at the Hong Kong Jockey Club in Sha Tin.  This invitation provoked a response running to three pages from Philip, in which he expressed concerns as to the motivation behind the invitation, made many observations which can only be described as offensive (including statements to the effect that Victor’s character must have improved since this was the first time he had asked to meet Madam Ip, and observations drawing comparisons between Madam Ip and Victor’s mother.  Philip also sought to impose a number of conditions (such as, that no one should start arguments during the gathering, that no one should attempt a physical assault on him, or discuss the pending litigation in which he was involved, or try to take the opportunity to assess Madam Ip’s physical and mental state, which was in issue in the action brought by Ada).  It is scarcely surprising that Victor’s reaction was to cancel the dinner.  This caused Philip to suspect that the invitation was some sort of trick, showing disrespect to himself and Madam Ip, a matter which in his view should disqualify Victor as a candidate for membership of the Tong.  Philip’s rather difficult approach to this matter is, I have to say, reflected in much of the correspondence emanating from him which was looked at during the course of the trial.

Approval of the 5^th to 9^th Petitioners’ applications

36.  Despite Philip’s opposition, it was resolved that the five applications “are hereby approved on the condition that the proposed resolutions in favour of the amendments of Memorandum and Articles of Association of the Tong as reached by the Executive Committee on 8^th March 2002 to be considered at the impending Extraordinary General Meeting scheduled on 2^nd July 2002 have also been duly passed and taken their statutory effect”.

37.  On 2 July 2002, the Extraordinary General Meeting was held.  It was attended by Larry (who held proxies for his sons), John (who held proxies for Sandy and Maily), Philip and Ada.  Although Ada was not entirely happy about the proposed amendments, regarding the amendment which imposed additional conditions before women could become members of the Executive Committee as being discriminatory against women, the amendments were unanimously approved.

Difficulties in respect of the membership of the 5^th to 9^th Petitioners

38.  Following the Extraordinary General Meeting, it appears that Philip sent application forms to the five applicants.  These differed from those filled in by his and Larry’s children.  Instead of requiring an address, a residential address was requested.  Contact telephone numbers (home, mobile and office) were also sought.  There does not appear to have been any problem with the forms sent back by Ms Mak, Victor, or Tin Sum.  However, the forms sent back by Winnie and Keung gave rise to considerable correspondence on Philip’s part.

39.  So far as Winnie was concerned, Philip eventually wrote to her on 9 November 2002, informing her that she had not put in her full English name, filled in a Hong Kong office address (John’s) instead of her residential address, provided a Hong Kong office phone number at which she could not be reached, as she lived in the United States, had failed to put in a residential number, and did not have the form signed by her sponsor.  He asked her to fill out a fresh form.  This letter was returned undelivered, as Winnie had refused to accept it.  This led to Philip writing to Winnie on 22 January 2003 calling for an explanation as to why she had refused delivery of the letter, and stating that in the absence of a response, she would be regarded as having withdrawn her application for membership of the Tong.  Having received this letter, Winnie wrote to Mr Yiu, addressing him as the Secretary of the Tong, although in the body of her letter she referred to him as the representative of the Tong’s Secretary, CMC.  In the letter, she provided her full name, and explained why she wished to receive communications from the Tong at the Hong Kong address she had given, and why she was unwilling to provide a telephone number in the United States.  She asked for confirmation as to her membership.  Finally, she raised a query in relation to the liquidation of another company called Everwise (Hong Kong) Limited.  CMC replied on 21 February 2003, denying that Mr Yiu was Secretary of the Tong, and stating that the question of membership was for the Executive Committee, so that her letter would be referred to the Secretary of the Executive Committee (Philip) for further action.  The rest of the letter dealt with the request in relation to Everwise (Hong Kong) Limited, essentially declining to provide the information sought.  There ensued further somewhat acrimonious correspondence between Winnie and Mr Yiu, which led nowhere.

40.  As for Keung, his application form also provided a Hong Kong office address (again, that of John) and only provided a Macau mobile telephone number.  Philip wrote to Keung on 14 November 2002, asking for both of Keung’s residential addresses (as he had homes in Macau and Thailand) and asking for his home telephone numbers as well.  It appears that Keung then telephoned Mr Yiu of CMC, after which there was a conversation between Keung and Philip in which Keung declined to provide addresses and home telephone numbers.  At the trial, Keung explained that he was more easily reached through his mobile telephone number, and that he preferred to receive mail at John’s office in Hong Kong, as he was often away from his home on business.  It would appear that he provided a similar explanation to Philip, who was not happy with it, and wrote to Keung on 26 November 2002 to reiterate this, indicating that he regarded this as a failure to comply with the regulations of the Tong.  Thereafter, in March and April 2003, Keung wrote several letters to CMC, seeking confirmation of his membership status, without apparently receiving any reply.  Keung pointed out (in my view correctly, and consistently with advice given by Mr Yiu at the Executive Committee meeting of March 2002) that CMC was the Secretary of the Tong (although Philip was Secretary of the Executive Committee) and as such was charged with confirming the admission of membership to new members and sending them a membership card.

41.  On 20 March 2003, Victor also wrote to Mr Yiu seeking information as to his membership status.

Revocation of the 5^th to 9^th Petitioners’ memberships

42.  The correspondence between Winnie, Keung and Victor on the one hand and Mr Yiu and CMC on the other was copied to Philip.  As a result, Philip prepared a report for the Executive Committee in respect of the membership applications, accusing Winnie and Keung of deliberately harassing Mr Yiu and CMC, rather than sending their letters to himself as Secretary of the Management Committee, and refusing to provide information required on the application forms which he had sent them.  He also accused John of acting improperly in putting in an application for membership on behalf of his daughter and trying to obtain Larry’s approval for it, bypassing Philip.  He suggested that what he described as the tentative approval of the applications should be revoked and that the applications of Ms Mak, Keung, Victor, Tin Sum and Winnie should not be considered in future.

43.  Larry agreed to this course.  However, at the trial, he said that he had simply taken Philip’s word for it that the 5^th to 9^th Petitioners had acted in bad faith and were not suitable to be members of the Tong.

44.  As a result, on 30 March 2003, the Executive Committee resolved (John indicating his dissent by a notation on the minutes) that “the tentative approval of the membership applications of [Ms Mak, Winne, Keung, Victor and Tin Sum] passed in the Executive Committee meeting dated June 26, 2002, but which the formal admissions as members were not realised, is hereby revoked.  Membership applications of these applicants are not approved and will not be considered in future”.

John’s request for minutes of meetings

45.  Thereafter, John decided that he wanted to go through the minutes of the Tong’s general meetings and Executive Committee meetings, with a view to clarifying the position and explaining it to the 5^th to 9^th Petitioners.  On 7 April 2003, he wrote to CMC stating that he wished to obtain copies of all such minutes, and would send someone to collect them at 11:30 the next morning.  When his representative attended, he was not provided with the documents in question.  John then went to CMC’s offices himself, but was not given the documents and was made to leave.

46.  This led to correspondence and complaints from John to CMC, which culminated in proceedings being brought against CMC by John.  In the course of such correspondence and in pleadings filed in such proceedings, CMC made it clear that it had acted on the instructions of the Executive Committee members, i.e. Larry and Philip.  When questioned about this, both Larry and Philip denied having told CMC not to provide the documents to John.  They both said that they had told CMC to make its own decision as to what to do, and had not indicated any view on the matter.  I do not accept this evidence.  Given that this was one of the complaints on which the petition was founded, Philip and Larry clearly had reason to seek to play down their role in the refusal to supply the documents.  On the other hand, CMC had no personal interest in the matter, and it seems to me likely that they would have sought and obtained instructions as to how to deal with John’s request.  I am therefore satisfied that Larry and Philip did instruct CMC to decline John’s request for copies or inspection of the documents.

47.  As a result of this incident, Larry and Philip resolved, at the next Executive Committee meeting held on 4 May 2003, that a new procedure should be adopted for inspection of minutes of meetings.  Any member wishing to inspect the minutes of members’ meetings, and any Executive Committee member wishing to inspect the minutes of the Executive Committee’s meetings, would be required to give three days’ notice and would have to be accompanied by another Executive Committee member, or a member of CMC’s staff, when inspecting the minutes.  John did not attend this meeting, having unsuccessfully requested an adjournment of it on the basis that Philip had not been well and had been coughing (this being at the time when Hong Kong was suffering the height of the SARS virus).

48.  It should be noted that in the end, copies of the minutes were provided to John after the commencement of these proceedings.  They were offered in an affirmation by Larry in September 2003, and eventually supplied in June 2004.

Complaints about banking arrangements

49.  Meanwhile, when CMC replied to Winnie’s letter, it provided a copy to Philip, and also sought to bill the Tong the amount of $1,000 for writing the letter (notwithstanding that at least half the letter did not appear to have anything to do with the Tong and the rest of the letter simply consisted of a denial that Mr Yiu was the Company Secretary of the Tong, and that the right person to write to was, in any event, Philip).  Not surprisingly, John (who had up to this point been, with Larry, a usual signatory on the Tong’s cheques) balked at making this payment.  However Larry and Philip resolved at the 4 May 2003 Executive Committee meeting that CMC should be paid for the letter to Winnie, and also reimbursed their legal costs incurred as a result of John’s complaint about not being allowed to see or obtain copies of the various minutes (a factor which would tend to support my conclusion that CMC had acted on their instructions), and that in future, cheques would be signed by Larry and Philip.

50.  Thereafter, Larry and Philip instructed the Tong’s banker to send future bank statements to its registered office, instead of to John’s office, as had previously been the arrangement.  It was accepted that John had not been notified of this in advance.  Shortly thereafter, the petition in these proceedings was presented.

Two preliminary points

51.  Before I go on to consider the underlying merits of the claim to the winding up or alternative relief sought, I shall deal with two points which were raised by Mr Ng.  These were that:-

(1)	The 5th to 9th Petitioners had no locus to petition for any relief, as they were not members of the Tong, not having had their names entered on its register; and
(2)	In any event, no winding up should be ordered because none of the Petitioners could show that they had any tangible interest in the granting of winding up relief.

Whether the 5^th to 9^th Petitioners had locus to present the petition

52.  As to the first point, this was based on the provisions of section 28 of the Ordinance, which provides:-

“(1)	The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.
“(2)	Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.”

53.  Mr Ng submitted that this reflected the position at common law.  He said that as none of the 5^th to 9^th Petitioners had been entered on the Tong’s register of members as a member of the Tong, they were not to be regarded as its members, and as such could not seek to wind it up or to obtain other, alternative, relief under section 168A of the Ordinance.

54.  Mr Chan submitted, in response, that:-

(1)	On the proper construction of article 4 of the Tong’s articles of association, the 5th to 9th Petitioners were members of the Tong, since they had been admitted to membership on 2 July 2002, when the condition attached to their admission as members at the Executive Committee meeting of 26 June 2002 was fulfilled.
(2)	He pointed out that the position was different from that in other companies, where the directors were almost invariably given power to refuse to register a transfer or transmission of shares.  He said that the situation here was analogous to one in which the directors of a company had approved a transfer, but where for some reason the transferee’s name was not thereafter placed on the register.
(3)	He went on to say that the 5th to 9th Petitioners having been admitted, it was not open to Larry and Philip to revoke their membership without observing the procedures under articles 9 and 10, which was not done here.
(4)	He further submitted that even if registration on the register of members was generally necessary, this was subject to an exception where it would be unjust to refuse recognition of the parties’ status as members, for example where the failure to register was due to the wrongful act or default of the company or its officers.  In support of this proposition, he relied on the decision of the Singapore Court of Appeal in Kitnasamy s/o Marudapan v Nagatheran s/o Manogar [2000] SLR 598, where it was held that a person who had agreed to take up shares in a company, been appointed a director and performed valuable services for the company thereafter, was entitled to present the equivalent of a section 168A petition, notwithstanding that because of the company’s default, he had not been entered on the register of members.  It appears that in that case, the company had sent him notices of general meetings as well.  The court held that in the circumstances, the company was estopped from denying his status as a member of the company.

55.  I have come to the view that Mr Chan is right.  It is clear from the terms of the resolution of the Executive Committee on 26 June 2002 that the approval of the memberships of the 5^th to 9^th Petitioners was conditional but not tentative or provisional, whatever Philip might have wished to believe.  In my view, there was no basis for Philip to suggest, in his memo to the Executive Committee of 28 March 2003 that the approval was only tentative, and subject to formalisation.  Once the amendments to the memorandum and articles of association had been approved by the Extraordinary General Meeting and had taken effect, as they did, there was no further need for an application to be made by the 5^th to 9^th Petitioners, or for further consideration of their applications (which had in fact been made in November and December the previous year) by the Executive Committee.  All that needed to be done was for their names to be entered on the list of members, and for them to be sent their membership cards and other documents in accordance with article 8.  This was the job of the Tong’s Secretary, which was CMC.  It seems to me that the reference to the Secretary of the Tong in that article is clearly a reference to the person or entity fulfilling the role as its Company Secretary, and not to the Secretary of the Executive Committee (to whom reference is made elsewhere in the articles).

56.  If this was not done, it seems to me that it would be clearly unjust if the Tong were able to deny them their membership because it had itself failed to take the steps which it should have to perfect their membership.  In these circumstances, I would hold that the Tong, and Larry and Philip, are estopped from denying the 5^th to 9^th Petitioners membership of the Tong, by reason only of their own failure to see to it that they were registered as members, their applications having been approved.

Effectiveness of the purported revocation

57.  Further, I do not think that the purported revocation of their membership on 30 March 2003 could be effective.  While article 9 does give the Executive Committee power to convene a meeting to consider the revocation of a member’s membership, it is clear from article 10 that the member concerned should be given an opportunity to state his case.  This was never done here.  In the circumstances, there could be no valid revocation of the membership of the 5^th to 9^th Petitioners.

58.  Moreover, it seems to me that in any event, the basis on which Philip was contending that their memberships should be revoked was untenable.  The suggestion that they were not providing information required by the Tong does not stand up to scrutiny.  The information that was not being provided was not information that was required to be provided on any form of application that had been resolved upon by the Executive Committee.  Nowhere in the minutes of the meetings of that body is there any reference to any form of application for membership having been approved.  It is clear from Philip’s evidence that he simply made up the first versions of that form when he was putting in his children’s application for membership.  In doing so, he was doing nothing different from the 5th to 9th Respondents when they simply wrote in to apply for membership.  The form used was not in any way approved or resolved upon by the Executive Committee so as to constitute a form prescribed by the Executive Committee within the meaning of article 7.  The position was that there was no form that had been so prescribed.  It was therefore unnecessary for the 5th to 9th Respondents, whose membership had, in my view, already been approved, to fill in a further application form.  The fact that they appear to have tried to fill in the form provided by Philip does not mean that they were obliged to do so, or that the Tong or its Executive Committee could insist on this being done.

59.  Additionally, the dispute that blew up between Philip on the one hand, and Winnie and Keung on the other clearly demonstrates the lengths to which Philip was prepared to go to try to keep them out of the Tong.  The only real purpose of having contact details provided would be to enable the Tong to communicate with its members.  So long as some details which would be effective for the purpose were provided, this should have sufficed.  I can see no good reason for Philip to have insisted on being provided with residential addresses and telephone numbers, particularly when these were not required in respect of the applications of his and Larry’s own children.

60.  The excuse that Winnie and Keung had somehow acted improperly in approaching CMC for confirmation of their status as members is equally unfounded.  CMC was the Company Secretary of the Tong.  As such, it was the entity charged with the duties under article 8.  That being so, there was in my view no impropriety in Winnie and Keung approaching CMC on this subject.  Although it is fair to say that some of the language used in their correspondence with CMC was strong, this was in my view provoked by the approach which Philip had taken, and (in the case of Winnie) the terms of CMC’s response to her inquiry.  Moreover, given the length of time which had elapsed since their admission in July 2002, it is scarcely surprising that they should have been unhappy at the delay in dealing with their questions.

61.  So far as Victor is concerned, the only complaint against him would appear to be that he wrote to CMC on 20 March 2003 to find out what was going on in respect of his membership.  I can see nothing improper in his having done so.  To the contrary, it was entirely natural, having regard to the delay.

62.  So far as Ms Mak and Tin Sum were concerned, they appear to have done nothing at all to justify any criticism of them, apart from being simply tarred by the same brush so far as Philip was concerned, as their applications had been supported by John.  Mr Ng suggested that Philip and Larry were justified in being concerned as to the motivation of the 5^th to 9^th Respondents in choosing to apply for membership of the Tong almost simultaneously.  However, it seems to me clear from the evidence of Larry, and the way in which Philip responded in cross-examination, that the only real concern was that Larry and Philip might be voted out of office.  This was not, in my view, a legitimate factor to take into account, whatever might have been the Grandfather’s initial preferences or wishes.  Although I would be disposed to accept that the Grandfather did have a preference for the affairs of the old company, and thus also its successor the Tong, to be managed by Larry, John and Philip, no steps were taken to entrench their position in the Tong.  I therefore do not think that it would have been right for Larry, John and Philip to take the view that that they should never be removed from management of the Tong.  In this, as in a number of other areas, it seemed to me that Larry and Philip in particular were ascribing to the Grandfather motives and desires that suited their own position.

63.  In these circumstances, I do not think that there was any proper basis for revoking the memberships of the 5^th to 9^th Defendants, even if the proper procedure had been followed.

64.  To his credit, Larry did accept in cross-examination that he had relied almost entirely on Philip’s assessment of the 5^th to 9^th Defendants in deciding to agree with Philip as to what should be done about their applications, and that he had not himself looked into the matter.  It was clear that he was anxious to avoid getting involved in the arguments between Philip and the others on other matters, and this seems to have led him to take a much more passive role than was desirable, going along with everything Philip suggested, in relation to the affairs of the Tong.  Philip, however, struck me as being entirely unrepentant, and unwilling to accept that his actions were (as I consider they were) in any way wrong or unreasonable.

65.  I therefore conclude that there was and could have been no valid revocation of the memberships of the 5^th to 9^th Petitioners.  That being so, they were in my view admitted as members of the Tong, and for the reasons which were advanced by Mr Chan, which I accept, they are not prevented from bringing these proceedings just because they were (wrongly) not put on the register of members.

Alleged lack of tangible interest to justify petition for winding up relief

66.  As to Mr Ng’s point as to the lack of tangible interest on the part of the Petitioners in the obtaining of a winding up order, this was based on the line of cases starting with Re Rica Gold Washing Co (1879) 11 Ch D 36.  In that case, it was clear from the allegations in the petition that a winding up would result in nothing of benefit to the petitioner, and the English Court of Appeal held that in such circumstances, the petitioner was not entitled to present a winding up petition in respect of the company.  The decision was followed in England by Oliver J in Re Chesterfield Catering Co. Ltd [1977] 1 Ch 373, where he noted that a tangible interest was not confined to the existence of a surplus of assets available for distribution to the shareholders.  In Hong Kong, the position is less clear, as the Court of Appeal had, in Re DJH Consultants Ltd (unreported, CA, Civ App 164 of 1984) expressed the view (obiter) that it was no longer necessary for a contributory petitioner whose shares were fully paid up to establish a tangible interest in the liquidation of the company concerned.  However, in Ng Yat Chi v Max Share Ltd (No. 2) [2000] 4 HKC 469, a differently constituted Court of Appeal took a different view, concluding (also obiter) that it remained necessary for a contributory petitioner to demonstrate the existence of a tangible interest (per Rogers VP at 486C-487C).

67.  The rule regarding the requirement to show a tangible interest appears to have been introduced with a view to preventing petitions being presented by contributories where they could serve no useful purpose, and might therefore be presented for some other illegitimate purpose (see the judgment of Jessel MR in the Rica Gold Washing case at p.46).  It would therefore seem to have a useful purpose to serve.

68.  However, as was made clear by Oliver J in the Chesterfield Catering case, the existence of a tangible interest is not limited to the situation in which there are assets available for distribution.  That being so, I do not think that Mr Ng’s objection that in this case, the assets could not (having regard to the seventh clause of the memorandum of association) be distributed is fatal, so long as some other useful purpose of a winding up order could be shown.

69.  Mr Ng submitted that there could be no useful purpose in this case, since all that would happen would be that the assets of the Tong would have to be transferred to a similar organisation.  In the present case, John has taken steps to incorporate a company with very similar objects.  Mr Ng says that this does not help, since all it means is that the position in the Tong will be replicated, but only after considerable inconvenience and expense, so that all the members would ultimately be somewhat the worse off.

70.  It seems to me that even though a distribution of assets may be prohibited, there would still be a useful purpose to be served in a winding up of the company, assuming that the behaviour of Philip and Larry was such as to justify that course being taken, since it would have the effect of removing control of the affairs of the Tong from them, and transferring it to persons involved with a new organisation which existed for the benefit of the Grandfather’s descendants.  This would, I think, be a sufficiently tangible interest to justify the presentation of the winding up petition in this case.

Whether it would be just and equitable to wind up the Tong

71.  I turn then to consider whether or not it would be just and equitable to wind the Tong up, having regard to the matters to which I have and the findings which I have made.

72.  Mr Chan submitted that it would be, either because:-

(1)	It was no longer possible to carry out the objects of the Tong, so that the substratum of the Tong had been lost.  In this regard, he submitted that the most important object of the Tong was that stated in sub-paragraph (1) of the third clause of its memorandum of association - the fostering of bonds of friendship among people surnamed Mak, descended from the Grandfather.
(2)	Alternatively, the behaviour of Philip and Larry had been such as to result in a justifiable total loss of trust and confidence in them on the part of the Petitioners.

Loss of substratum

73.  As to the former point, it seems to me that on basis of the evidence given by the witnesses at the trial, it would be difficult to say that it was no longer possible to carry out the objects of the Tong.  This is because:-

(1)	It is an oversimplification to say that this was the overriding purpose of the Tong, such that the inability to achieve it would mean that the underlying substratum of the Tong was lost.  Philip and Larry suggested that the organising of ancestral worship, and the granting of relief to descendants of the Grandfather where necessary, were equally, if not more important.  In my view, it cannot be said that the fostering of bonds of friendship is the sole or such a dominant objective that its frustration should be regarded as justifying the winding up of the Tong.
(2)	Further, the fact that John has caused to be incorporated a new company with similar objects to the Tong indicates that there are a number of its objects that can still be pursued.  This being so, it cannot be said that the Tong’s substratum is entirely gone.
(3)	Almost all of the witnesses expressed the hope that it would be possible to rekindle the fellow feeling that had previously existed after all the disputes and litigation between the family members had been dealt with.  Although it may be that this is more a matter of hope than expectation, it does suggest that there is a possibility at least that even the first mentioned object in the object clause of the Tong could be achieved at some future point in time.   This too, suggests that the Tong’s substratum has not been completely lost.

Loss of confidence

74.  As to the latter point, however, I am quite satisfied that it would be appropriate to wind the Tong up on this ground.  There are several reasons for this.

75.  I have borne in mind that the behaviour which is relied upon as justifying the loss of confidence alleged must relate to the conduct of Larry and Philip in the conduct of the Tong’s affairs, and that it is not sufficient if the loss of confidence arises simply from being outvoted on the internal policies of the company (see Loch v John Blackwood Ltd [1924] AC 783).

76.  That said, it seems to me quite clear that the behaviour of Philip and Larry in relation to the problems caused for the 5^th to 9^th Petitioners with respect to their applications for membership after they had been approved and taken effect on the satisfaction of the conditions stipulated for approval was such as to lead to a justifiable lack of confidence in their integrity in the conduct of the affairs of the Tong, not just by the 5^th to 9^th Petitioners, but by the 1^st to 4^th Petitioners as well.

77.  I do not agree with Mr Ng’s submission that the complaint in relation to these matters were made only by the 5^th to 9^th Petitioners, individually in relation to their individual applications.  I read the re-amended petition as making this complaint on behalf of all of the Petitioners, all of whom rely on it as a basis for their loss of confidence in Larry and Philip.  Thus, even if I am wrong in my conclusion as to the locus of the 5^th to 9^th Defendants, this would make no difference to the outcome of these proceedings.

78.  The handling of this matter clearly involved the management of the Tong’s affairs.  I do not think that it can be said that it is simply a matter of dissatisfaction on John’s part at being outvoted.  As I have explained above, there was no justification for the course which was adopted.  It was clearly wrong for Larry and Philip to have purported to revoke the memberships of the 5^th to 9^th Respondents without following the procedures laid down in the articles of association, and on the insubstantial grounds relied upon.  In my view, these actions, particularly on the part of Philip, were taken in order to try and protect their own position, notwithstanding that his membership of the Executive Committee had already been entrenched.  This was, as I have indicated, not a good or valid reason.  This episode in itself justifies a complete loss of confidence in the ability of Philip to deal with the affairs of the Tong in a fair and impartial manner.  So far as Larry is concerned, even if he might be regarded as less culpable than Philip, the failure on his part to exercise any real independent judgment as to the matter would equally justify a loss of confidence in him.

79.  So far as the other complaints are concerned, I would agree with Mr Ng that they are less serious.

80.  As to the complaint as to the withholding of the minutes, I would accept that the demand initially made by John was not one which he was necessarily entitled to make, at least in regard to the provision of copies of the minutes of members’ meetings (which are required to be provided under section 120 of the Ordinance only on seven days’ notice being given).  However, it does seem to me that the proposed procedure for inspection of minutes would, so far as minutes of members’ meetings are concerned, have contravened the provisions of that section, which require them to be open for inspection for at least two hours each day.  As for minutes of the Executive Committee meeting, I can see little justification for imposing restrictions on inspection by a member of the Committee.  None of the witnesses were able to suggest that they had had experience of such a condition in other companies.  It seems clear that the condition was imposed in order to make it more difficult to obtain access to the minutes.  Although I do not think that it would, on its own, have justified a loss of confidence to the extent necessary to support a winding up of the company on the just and equitable ground, it does add to the justification provided by the way in which the revocation of the 5^th to 9^th Petitioners’ memberships was effected.

81.  So far as the suggestion of exclusion from management by the change in address for correspondence with the bank and exclusion from signing cheques is concerned, I regard this as a relatively minor matter.  Although John said that he did not learn of the change until some time in mid-June 2003, this is inconsistent with the fact that he was able to plead the complaint in the petition which was served in early June 2003.  Further, he accepted in evidence that he did not have to sign the cheques, and withdrew this aspect of the complaint, although he maintained that he needed to see the bank statements in order to discharge his duties.  He was clearly entitled to these in any event, as they would form part of the accounting records of the Tong which he, as someone in the position of a director, would be entitled to inspect.  I therefore would not have regarded this item as sufficing to justify a loss of confidence in Larry and Philip.

82.  Finally, as for the complaint about the amendments to the memorandum and articles of the Tong, it seems to me that given that they were unanimously agreed to by the then members of the Tong who voted on them, who included the 1^st to 4^th Petitioners, there is no real basis on which they can complain about these amendments independently of their complaint as to the revocation of the 5^th to 9^th Petitioners’ memberships.  Had the 5^th to 9^th Petitioners been duly afforded the rights of members of the Tong, I do not think that it would have been open to the 1^st to 4^th Petitioners to challenge these amendments.  As for the 5^th to 9^th Petitioners themselves, I do not think that it is open to them to challenge these amendments, which were passed prior to their becoming members of the Tong.  If they regarded the changes as unacceptable, it seems to me that their only recourse would have been to withdraw their applications, or resign their memberships.

83.  Thus, I would not have regarded these other matters as justifying such a lack of confidence in Larry and Philip as to make it appropriate to wind up the Tong.  However, as I have noted, they do spring from the same source and are related to the issue as to the revocation of the 5^th to 9^th Petitioners’ memberships.  In these circumstances, I think that they do nonetheless add, even if slightly, to the justifiability of the Petitioners’ loss of confidence in Larry and Philip.

Conclusion and costs

84.  A number of other matters were gone into in evidence in the course of the trial, and several other criticisms were made of the evidence given by Philip in respect of these matters.  As it is not necessary for me to go into these matters in order to dispose of these proceedings, I have not done so.

85.  For these reasons, I have come to the conclusion that it would be right to order that the Tong be wound up, and I so order.  Having done so, it is not necessary for me to consider whether or not the alternative relief sought by the re-amendment to the Petition should be granted.

86.  So far as costs are concerned, it seems to me that these should follow the event, and I shall therefore make an order nisi that the Petitioners’ costs are to be paid by the 1^st and 2^nd Respondents, to be taxed on the party and party basis if not agreed.