TAM TAK YAM v. MAN SHING TEXTILES LTD AND OTHERS

HCMP 2641/2017

[2019] HKCFI 1449

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2641 OF 2017

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JUDGMENT

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The application

1.  This is an application by the applicant (“the Applicant”) by Originating Summons made under section 42 of the Companies Ordinance, Cap 622 (“Cap 622”) against the 1^strespondent (“the Company”), the 2^ndrespondent (“Tang”) and the 3^rdrespondent (“the Registrar”) for, inter alia, the following relief:

“ 1. The Form ND2A (Notice of Change of Company Secretary and Director) of the Company filed on 10^th November 2017 be declared null and void and be removed from the Companies Register;

2. The Registrar of Companies do rectify the information in the Companies Register by restoring the Applicant as a director of the Company in the Companies Register;”

2.  The Company is unrepresented and absent.  The Registrar has asked to be excused from attendance.  Thus, at the hearing before me,the only opposition to the Applicant was Tang who was represented by counsel.

3.  The Form ND2A (Notice of Change of Company Secretary and Director) in question (“the Form ND2A”) was filed by Tang with the Companies Registry (“the Registry”) on 10 November 2017 whereby Tang in her capacity as a director of the Company gave notice to the Registry that the Applicant had ceased to be a director of the Company as from 9 November 2017. Such notice thereafter became recorded on the Companies Register.

Factual background

4.  The Company was incorporated in Hong Kong in 2004.  Its issued share capital is 12,000 shares of $1 each and the paid up capital is $12,000.  Originally, there were three shareholders in the Company, namely, the Applicant, Tang and another person by the name of Yeung SiuMing (“Yeung”), each holding 4,000 shares.  Originally they were also all directors of the Company.  Yeung subsequently ceased to be a director.

5.  There is another company by the name of Man Lung Textiles Limited (“Man Lung”) in which the Applicant held 500,000 shares and Tang and Yeung each held 250,000 shares.

6.  It is common ground between the parties that the Company does not carry on any trade or business of its own but is the holding company of its wholly-owned subsidiary incorporated in Dongguan on the Mainland by the name of “東莞萬禧紡織製品有限公司” (“Wan Xi”) which has a registered capital of HK$8,000,000.  The Applicant was originally the legal representative (法人代表) and a director of Wan Xi.  The usual mode of operation was that Wan Xi would receive orders for the manufacture and supply of garments placed by Man Lung and would carry out such orders.

7.  By an Agreement for Sale and Purchase dated 30 January 2015 and made between Yeung of the one part and Tang and the Applicant of the other part (“the SPA”), Yeung agreed to sell his 4,000 shares in the Company and his 250,000 shares in Man Lung to Tang and the Applicant on the terms and conditions contained in the SPA.

8.  It is the case of Tang that the sale and purchase under the SPA has not been completed because some of the stipulated conditions in the SPA have not been fulfilled. Consequently, at all material times, Yeung remained a shareholder of the Company.

9.  Originally, the Applicant took the point that the sale and purchase under the SPA had been completed and hence, at all material times,Yeung had ceased to be a shareholder of the Company.

10.  Without going into any detail, Yeung had started winding-up proceedings against the Applicant and Tang for the winding-up of the Company and of Man Lung.  The status of Yeung as a shareholder of the Company and of Man Lung became an issue in those proceedings.  By its Reasons for Judgment in CACV 3/2018 and CACV 4/2018 handed down on 16 August 2018, the Court of Appeal held that Yeung at all material times was still a registered shareholder of both companies.

11.  Hence, at the beginning of the hearing before me, Mr Law, counsel for the Applicant, confirmed that he was no longer taking the pointin this application that Yeung had ceased to be a shareholder of the Company.  As a result, there remain only two issues raised in this application which I shall go into later in this Judgment.

The relevant evidence of Tang

12.  According to Tang in her 1^st affirmation filed on 16 January 2018, after the SPA had been signed, it was discovered that surprisingly the accounts of Wan Xi had shown a loss of about $2 million in 2015, despite the fact that it had traded with Man Lung as aforesaid and had beengenerating income.  Subsequently, it was further discovered that Wan Xi’s loss had worsened to about $7 million in 2016 and that the Applicant had wrongly added the debts and liabilities of the Company incurred before the commencement of the involvement of Tang and Yeung in the Company.  There were other acts of impropriety alleged by Tang to have been committed by the Applicant.

13.  In his 2^nd affirmation in reply filed on 23 April 2018, the Applicant does not appear to have answered the allegations of impropriety made by Tang against him.

14.  I should point out that I have referred to the above allegations of impropriety purely as part of the background to the case and that they are in no way relevant to the application before me.  Thus, the fact that the Applicant has not addressed them is neither here nor there.

15.  Again, according to Tang, she and Yeung by way of a notice dated 13 August 2017 (“the Requisition Notice”) requested the Company tocall an extraordinary general meeting (EGM) for the purpose of deliberating on their proposed resolution to remove the Applicant as a director of the Company.

16.  The Company failed to call an EGM as requested within 21 days.

17.  Tang and Yeung thereafter gave notice of an EGM to be held on 30 October 2017 (“the EGM Notice”).  The EGM Notice was signed by both Tang and Yeung and dated 10 September 2017.  It was addressed to the Applicant at the following address:

 

“ Room 08-09
16/F CRE Centre,
889 Cheung Sha Wan Road,
Kowloon, Hong Kong” (“the registered office of the Company”)

The body of the EGM Notice read as follows:

“ NOTICE is hereby given the extraordinary general meeting of the members of MAN SHING TEXTILES LIMITED (the ‘Company’) will be held on Monday, the 30^thOctober, 2017 at 13:00P.M. at Flat LD, 8/F, Block 11, Le Prestige, Phase 2C, Lohas Park, Tseung Kwan O, New Territories, Hong Kong, to the below resolution.

TO REMOVE MR. TAM TAK YUM AS THE DIRECTOR OF THE COMPANY”

18.  In paragraph 22 of the 1^staffirmation of Tang filed on 16 January 2018, she deposed to the fact that that the Requisition Notice was couriered to the registered office of the Company.

19.  In the 2^nd affirmation of Tang filed on 22 January 2018, she deposed as follows:

“ 3. I have been under pressure since these proceedings and need to take drug to sleep. Upon my further review of my first affirmation, I wish to supplement paragraph 22 thereof.

4. The notice dated 13^th August 2017 delivered by courier was stopped by me because at the material time I doubted I had mixed and misplaced my personal documents (i.e. card statement and management fee invoice) with the said notice. For privacy reasons, I immediately instructed the courier service provider to withhold the mail.

5. It was already cut-off time when I picked up the mail on 18^thAugust 2017.  After my checking, I inserted the mail containing the said notice into the letter-box of the Company’s registered office on the same day.  I verily believe that the said notice must have come to the attention of the Applicant on behalf of the Company.”

20.  In the 3^rd affirmation of Tang filed on 15 March 2018, she deposed to the fact that the EGM Notice “was sent to the Applicant and the Company by inserting into the letter-box of the registered office of the Company on 15 September 2017.”

21.  In her 1^st affirmation, Tang said that on 30 October 2017, “a general meeting of the Company was held at Tseung Kwan O, New Territories, Hong Kong (being one of the properties of Mr Yeung) and a resolution to remove the Applicant as the director of the Company was duly moved.  Mr Yeung and I voted in favour of the same.”  She then produced a copy of the resolution passed duly signed by her and Yeung.  It reads as follows:

“ RESOLUTIONS OF THE MEMBERS made pursuant to the provision of Articles of Association of the Company:-

REMOVE OF DIRECTOR

NOTED THAT the remove tendered the following Director of the Company be accepted and THAT the Company Secretary or Director was instructed to give effect to all necessary statutory procedures.

MR. TAM TAK YUM

Date: 30^th October, 2017”

22.  Tang further explained that she and Yeung had decided that the venue of the EGM should not be at the Company’s address because they had regularly received threatening phone messages from some unknown persons who she very much believed to be acting under the direction of the Applicant.

23.  Tang has also given an account of various matters which allegedly took place after the said removal of the Applicant as a director ofthe Company.  I do not think they are relevant to the application before me.

24.  For present purposes, the next thing which happened was thatTang filed the Form ND2A with the Companies Registry on 10 November 2017.

The case of the Applicant

25.  At the beginning of the hearing, Mr Law, counsel for the Applicant, summarized the three main grounds on which the application was based:

   (i)   There was actually no valid notice of any general meeting issued or served by Yeung and Tang as alleged and there was no special notice to the Company as required by Cap 622.

   (ii)   The EGM alleged to have been held on 30 October 2017 actually did not take place.

   (iii)   In any event, the EGM Notice was not valid and the EGM allegedly held on 30 October 2017 was also not valid because at all material times Yeung had ceased to be a member of the Company.

26.  As already pointed out in paragraph 11 above, subsequently in the course of the hearing, Mr Law indicated that he would no longer rely on the third ground.  Hence, only the first two grounds remain.

27.  On the first ground, the Applicant says as follows:

   (i)   The Applicant and his mother, Law Lai Sheung (“Law”) who had been the company secretary of the Company, had never received the alleged Requisition Notice or the alleged EGM Notice and did not have notice of the alleged holding of the EGM on 30 October 2017.  They have both deposed on affirmation to that effect.

   (ii)   On Tang’s own showing, the alleged EGM Notice was not duly served on the Company as required by section 829(2) of Cap 622.  The insertion of the document by hand into the Company’s letter-box at its registered office does not satisfy the statutory requirement.

   (iii)   Furthermore, the alleged EGM Notice was addressed to the Applicant and not the Company and hence did not qualify as a “special notice” to the Company as required under sections 462(4) and 578 of Cap 622.

   (iv)   In any event, the alleged EGM Notice was not sent to the correct address of the Applicant.

28.  On the second ground, the Applicant says that there were various suspicious circumstances which point to the fact that there was actually no EGM held at the place and on the date as alleged by Tang and Yeung.

The case of Tang

29.  Mr Tsui, counsel for Tang, has countered the argument of Mr Law by referring to various parts of the evidence and has also relied on the irregularity principle, if necessary.

Discussion

30.  I deal first with the questions as to whether Tang did insert theRequisition Notice and the EGM Notice into the letter-box of the Company at its registered office as alleged and whether the Applicant and Law did have notice of the EGM Notice.  As there was no cross-examination of the witnesses, I can only deal with the questions based on the balance of probabilities on the affirmation evidence.

31.  It is clear that Yeung and Tang wanted the Company to hold an EGM for the purpose of removing the Applicant as a director.  It is also clear that they would be able to achieve that at a general meeting of the Company once one was convened and held because of their majority shareholdings.  There would have been no danger of their being voted down.  I do not think that, in the above circumstances, there would have been any reason for Yeung and Tang to want to pretend to have served the Requisition Notice and then the EGM Notice and then to hold the EGM secretly.  Hence, on the balance of probabilities, I find that the Requisition Notice and then the EGM Notice were inserted into the letter-box of the Company by hand as alleged by Tang.  There is no evidence to the contrary,other than the denial by the Applicant and Law.

32.  If, as I have found, the Requisition Notice and the EGM Notice had been inserted into the letter-box of the Company by hand as alleged by Tang, I find it difficult to believe that the Applicant and Law would not have received them in the checking of the mail in the letter-box. In this regard, it is worthy of note that neither the Applicant nor Law has given evidence as to whether they or either of them had ever checked the contents of the letter-box at the registered office of the Company.  I therefore find on the balance of probabilities that the Applicant and Law did receive the Requisition Notice and the EGM Notice through the letter-box of the Company, despite the denial by the Applicant and Law referred to above.

33.  At this juncture, it is to be noted that, despite the denial by the Applicant and Law of receipt of the Requisition Notice, the Applicant has not relied on that as a ground in support of his application.  See paragraph 17(2) of the Opening Submissions of the Applicant which reads:

“ 17. The Applicant’s case premises on the following 3 grounds:-

(1)   [The point about Yeung not being a shareholder of the Company]

(2) Lack of GM Notice to A and Lack of Special Notice to the Company; and

(3) [The point about no general meeting had actually been held].”

34.  For the argument based on the allegation that no special notice of the EGM was given to the Company, the Applicant relies on the following provisions in Cap 622:

   (i)   “ 462.  Resolution to remove director

(1)   A company may by an ordinary resolution passed at a general meeting remove a director before the end of the director’s term of office, despite anything in its articles or in any agreement between it and the director.

(4)   Special notice is required of a resolution—

(a)   to remove a director;”

   (ii)   “ 578.  Resolution requiring special notice

(1)   If by any provision of this Ordinance special notice is required to be given of a resolution, the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting at which it is moved.

(2)   The company must, if practicable, give its members notice of the resolution at the same time and in the same manner as it gives notice of the meeting.

(3)   If that is not practicable, the company must give its members notice of the resolution at least 14 days before the meeting—

(a)   by advertisement in a newspaper circulating generally in Hong Kong; or

(b)   in any other manner allowed by the company’s articles.

(4)   If, after notice of the intention to move the resolution has been given to the company, a meeting is called for a date 28 days or less after the notice has been given, the notice is to be regarded as having been properly given, though not given within the time required.”

   (iii)   “ 463.  Director’s right to protest against removal

(1)   On receipt of notice of a resolution under section 462(4) to remove a director, the company must forthwith send a copy of the notice to the director concerned.

(2)   The director (whether or not a member of the company) is entitled to be heard on the resolution at the meeting at which the resolution is voted on.

(3)   If notice is given of a resolution under section 462(4) to remove a director, the director—

(a)   may make with respect to the resolution representationsin writing to the company (not exceeding a reasonable length); and

(b)   may request the company to comply with the requirement specified in subsection (4) in relation to the representations.

(4)   The requirement specified for the purposes of subsection (3)(b) is—

(a)   if the company receives the representations on a date that is more than 2 days before the last day on which notice may be given under section 571(1) to call the meeting, the requirement—

   (i)   to state, in every notice of the meeting given to themembers, that the representations have been made;and

   (ii)   to send a copy of the representations to every member to whom a notice of the meeting is or has been given; or

(b)   if the company has not sent a copy of the representations to every member to whom a notice of the meeting is or has been given, the requirement to ensure that the representations are read out at the meeting.

(5)   Unless exempted by an order under subsection (6), the company must comply with a request made under subsection (3)(b).

(6)   On application by the company or by anyone who claims to be aggrieved, the Court may order that the company is exempted from complying with the request, if it is satisfied that the person who has made representations and made a requirement under subsection (3)—

(a)   has abused the right to do so; or

(b)   has used such a right to secure needless publicity for defamatory matter.

(7)   If the company contravenes subsection (5), the resolution passed under section 462(1) is void even though section 562(1) is complied with.”

35.  For the argument based on the invalidity of the alleged sending of the EGM Notice by Tang to the Company by insertion of the same into the letter-box at the registered office of the Company, the Applicant relies on the following provisions in Cap 622:

   (i)   “ 827.  Service of document

A document may be served on a company be leaving it at, or sending it by post to, the company’s registered office.”

   (ii)   The relevant parts of section 821 which read:

“ 821. Interpretation

(2) In this Part—

(a) a reference to sending a document, except in Division 2—

(i) includes supplying, delivering, forwarding or producing the document and, in the case of a notice,giving the document; but

(ii) excludes serving the document; and

(b) a reference to supplying information includes sending,delivering, forwarding or producing the information.

(3)   For the purposes of this Part, a person sends a document, or supplies information, by post if the person posts a prepaid envelope containing the document or information.”

   (iii)   “ 829.  Communication in hard copy form

(1)   This section applies if a document or information is sent or supplied, in hard copy form, to a company by a person who is not a company.

(2)   The document or information is sent or supplied to the company for the purposes of an applicable provision if the document or information is sent or supplied by hand or by post to—

(a)   an address specified for the purpose by the company generally or specifically;

(b)   the company’s registered office; or

(c)   an address to which a provision of this Ordinance authorizes or requires the document or information to be sent or supplied.

(5)   If the document or information is sent or supplied to a company for the purposes of an applicable provision, it is to be regarded as being received by the company—

(a)   where the document or information is sent or supplied by post, at the time specified in section 824, unless the contrary is proved; or

(b)   where the document or information is sent or suppliedby hand, at the time when the document or information is delivered.”

36.  In summary, the argument of the Applicant as I understand it goes as follows:

   (i)   The EGM Notice was never inserted into the letter-box at the registered office of the Company as alleged by Tang.

   (ii)   In any event, neither he nor his mother, Law, who was the secretary of the Company, had ever received the EGM Notice.

   (iii)   Even if the EGM Notice had been inserted into the letter-box by Tang as alleged, it did not constitute a valid sending of the same to the Company because:

   (a)   it was addressed to him personally and not to the Company;

   (b)   the act of insertion of the document into the letter-box was not in compliance with sections 827, 829(2)(b) and 821(3) because it was not delivered by hand to the registered office of the Company or sent by ordinary post in a prepaid envelope to the registered office of the Company.

   (iv)   For the reasons set out above, no special notice had been given by Tang to the Company in accordance with section 578.

   (v)   Consequently, he had not been given an opportunity to exercise his right of protest against removal under section 463.

   (vi)   Furthermore, the EGM Notice allegedly inserted into the letter- box at the registered office of the Company, albeit addressed to him, did not constitute a valid notice to him of the EGM to be held because it should not have been sent to the registered office of the Company but some other address of him on the record of the Company.

37.  I do not accept the argument of the Applicant as set out above. I give my reasons below.

38.  First of all, I have already found on the balance of probabilities that Tang did in fact insert the EGM Notice into the letter-boxat the registered office of the Company and that the Applicant and Law did receive the same through the letter-box.  Thus they must have had notice of the EGM to be held on 30 October 2017 by about 15 September 2017 or shortly thereafter.  There was thus a gap of about six weeks between the two dates.  All this, of course, is in the context of the Company having only four persons with Tang and Yeung being in one camp and the Applicant and Law (his mother as well as the secretary of the Company) being in the opposite camp and being in control the management of the Company and its registered office.

39.  As I read the statutory provisions referred to in paragraph 34 above, there is no magic in the expression ‘special notice’.  All that is required is that the proposer of the resolution to remove a director must give at least 28 days’ notice of the same to the Company and that the company should, “if practicable”, give an equivalent amount of notice or at least 14 days’ notice to its members before the holding of the general meeting.  This requirement is for the purpose of enabling the director who is proposed to be removed an opportunity and sufficient time to make representations to the company and to seek to persuade all other members of the company not to remove him.

40.  In the present case, we are dealing with a company with four persons as described above.  It is obvious that Law, being the mother of the Applicant and the secretary of the Company (and in charge of the management of the Company), are in the same camp, because she has made an affirmation in support of the present application.  The EGM Notice which stated clearly on its face that it was proposed to remove the Applicant as a director, once retrieved from the letter-box, must constitute notice of the EGM and the proposed resolution to both the Applicant in his personal capacity as the director proposed to be removed and Law as the secretary of the Company.

41.  If the Applicant had been minded to make representations to the Company and the other members of the Company, being only Tang and Yeung, he had had ample opportunity to do so within the said period of about six weeks.  He, however, did not.  It is also quite obvious that in the context of the company in this case, even if he had made representations,it would not have made any difference to the result.

42.  Regarding the Applicant’s point that the EGM Notice cannot betreated as valid notice to him because it was not sent to his correct address,Tang says that it had been the practice of all the members and directors in the Company that everybody would use the registered office of the Company as the address for sending documents to them individually.  In my judgment, whether that is so or not, it does not matter.  As will be seen later, as long as the EGM Notice was in fact received by the Applicant, it does not matter to which address it was sent.

43.  It is to be noted first that there does not seem to be any provision in Cap 622 governing the sending of a document by one member to another member or by one director to another director in a company.  The relevant parts of sections 825 and 832 read as follows:

“ 825. Address specified for purposes of sections 831(3)(b)(iii)and 832(2)(b)

(1) This section specifies the address, in relation to a document or information sent or supplied by a company to another person, for the purposes of sections 831(3)(b)(iii) and 832(2)(b).

(2) Subject to subsections (3) and (4), the address is—

(a) an address specified for the purpose by that other person generally or specifically; or

(b) an address to which a provision of this Ordinance authorizes or requires the document or information to be sent or supplied.

(3) If that other person (whether or not a company) is a member,debenture holder, director or company secretary of the company, the address is—

(a) the address specified in subsection (2); or

(b) the person’s address as shown in the company’s register of members, register of debenture holders, register of directors or register of company secretaries.”

“ 832. Communication in hard copy form

(1) This section applies if a document or information is sent orsupplied,in hard copy form,by a company to another person.

(2) The document or information is sent or supplied to that other person for the purposes of an applicable provision if the document or information is sent or supplied—

(a) by hand to that other person; or

(b) by hand or by post to an address specified in section 825.”

44.  Even assuming that sections 825 and 832 have application in the present case on the basis that the EGM Notice should normally be sent out by the Company, it is to be noted that those provisions are in fact only permissive and have the effect of deeming due supply of documents to a recipient.  Indeed, an examination of all the provisions regarding the service and supply of documents in different cases under Part 18 of Cap 622 are of the same nature.

45.  The above position is to be contrasted with the position underthe Companies Act 2006 in England.  Section 1144(1) and (2) of that Act provide as follows:

“ 1144 Sending or supplying documents or information

(1) [To a company:]Document or information to be sent or supplied to a company must be sent or supplied in accordance with the provisions of Schedule 4.

(2) [By a company:]Documents or information to be sent or supplied by a company must be sent or supplied in accordance with the provisions of Schedule 5.”
   (emphasis added)

As an example, Part 2 of the said Schedule 4 reads as follows:

“ Part 2

Communications in hard copy form

Introduction

2 A document or information is validly sent or supplied to a company if it is sent or supplied in hard copy form in accordance with this Part of this Schedule.

Method of communication in hard copy form

3 (1) A document or information in hard copy form may be sent or supplied by hand or by post to an address (in accordance with paragraph 4).

(2) For the purposes of this Schedule, a person sends a document or information by post if he posts a prepaid envelope containing the document or information.

Address for communications in hard copy form

4 A document or information in hard copy form may be sent or supplied—

(a) to an address specified by the company for the purpose;

(b) to the company’s registered office;

(c)   to an address to which any provision of the Companies Acts authorises the document or information to be sent or supplied.”

As far as I am aware, there is no provision in Cap 622 equivalent to section 1144 of the Companies Act 2006 which is in imperative form by the use of the phrase “must be”.

46.  Hence, I am of the view that the modes of service or supplyingof documents by or to a company specified in Cap 622 are only permissive and not imperative. They only serve the purpose of complementing the deeming provisions.  They are also not exhaustive.

47.  The above point is well illustrated and my view is supported by the case of Stylo Shoes Ltd v Prices Tailors Ltd [1960] 1 Ch 396.  In that case, L let business premises in Manchester to T.  At the date of the lease,T’s registered office and principal place of business were in Huddersfield.  Subsequently, T transferred their registered office and principal place of business to Leeds.  They sent a notice of their change to L.  They also instructed the Huddersfield postmaster to redirect all their correspondence to the new address in Leeds.  Subsequently, L sent to T at the old address in Huddersfield a registered letter in which was enclosed a notice under section 25 of the Landlord and Tenant Act 1954 to determine the tenancy.  The letter was received by T after it had been redirected by the Huddersfieldpostmaster.  The relevant part of section 23(1) of the Landlord and Tenant Act 1927 read as follows:

“ Any notice…shall be in writing and may be served on the person on whom it is to be served either personally, or by leaving it for him at his last known place of abode in England or Wales, or by sending it through the post in a registered letter addressed to him there …” (emphasis added)

T sought to argue that the notice was not duly received on the ground that the registered letter containing it was sent to a place not being their principal office or their last known place of abode pursuant to the applicable provisions under the relevant statutes.  Wynn-Parry J held that there had been a valid service of the notice under the said section 23(1).  The purpose of the section was to ensure that a notice was given and actually received.  Its requirements were satisfied if a letter containing the notice was delivered to and in fact received by the person to whom the notice was given.  So far as the second mode of service was concerned, the act of sending a letter through the ordinary post was equivalent to “leaving it … at his last known place of abode”.  L’s failure to specify the correct address did not invalidate the service under the section.  It was held further that section 23(1) was permissive as to the modes of service, and the modes set out therein were not exhaustive, and that, as the clear intention of the legislature that the notice should be received by the person intended to receive it had been achieved, it was immaterial that the letter had reached the tenants by way of their old address.  The learned Judge referred to and relied on the case of Sharpley v Manby [1942] 1 KB 217, a judgment of the Court of Appeal which concerned the Agricultural Holdings Act 1923.  It was held by the Court of Appeal in that case that, although the statute specified that a notice might be “served on the person to whom it is to be given either personally, or by leaving it for him at his last known place of abode in England, or by sending it through the post in a registered letter addressed to him there”, that requirement was satisfied if ordinary post was employed and the notice was actually received by the person to whom it was sent.

48.  At pages 405 – 406, Wynn-Parry J said as follows:

“ … I am bound to interpret section 23(1) so far as the second mode of service is concerned as being satisfied if the ordinary post is used. It is true that the last known place of abode was not specified on the letter, but the words of MacKinnon L.J. appear to me to be wide enough to cover that, because he says if you usethe ordinary post and the letter is delivered to and received by theperson to whom the notice is to be given, you have complied with the requirements of the Act. Here, as a result of the direction to the postmaster at Huddersfield given by the tenants themselves, the letter was in fact, to use the words of MacKinnon L.J., left at the tenant’s last known place of abode. I am unable to accept the argument on that basis that the failure to specify the correct address is fatal to the landlords. The vital thing is that the letterwas in fact delivered. The whole purpose of section 23 is to see that a notice is given and actually received, and that happened in this case.

… It is perfectly true, as was pointed out by Mr. Holdsworth, that the requirement that the notice, etc. is to be in writing is imperative‌— ‘Any notice, request, demand or other instrument under this Act shall be in writing’; but then when the subsection goes on to deal with service the permissive verb ‘may’ is used, and that is in clear contradistinction to the imperative ‘shall.’ I can see no canon of construction which would entitle me to qualify the nature of the verb ‘may’ by anything that has gone before in the subsection. It follows that, although there are certain modes set out in the subsection, they are not to be regarded as being exhaustive. It therefore appears to me, apart from the reasoning in Sharpley v. Manby, that I am entitled to say, without praying in aid the second method, that is, leaving it for him at his last known place of abode, that it is sufficient if the letter is sent to and received by the plaintiffs. That in fact happened, and it matters not to my mind on this particular reasoning that the letter got to Leeds via Huddersfield, because I am now dealing with a method which is ex hypothesi outside the section. Clearly what did in fact happen achieved the clear intention of the legislature,namely, that the notice should be received by the person intended to receive it.”

(emphasis added)

49.  By the same reasoning, I hold that, even if the EGM Notice had not been supplied to the Applicant and the Company strictly and literally in accordance with the various modes set out in Cap 622, as long as the Applicant and the Company had received it (as I have found), that is sufficient compliance with Cap 622 and the EGM Notice had been validly sent.

50.  The above is sufficient to dispose of the present application.

51.  As regards the argument by the Applicant that no EGM was held on 30 October 2017 because there were various suspicious circumstances, it can be disposed of quite quickly.  Both Tang and Yeung have deposed on affirmation that the EGM was held on 30 October 2017 and that there was a written resolution which has been exhibited.  I find that the argument by Applicant is based on pure speculation and has no substance.

52.  In case I am wrong in my conclusions above, there are nevertheless other reasons as to why the application should be dismissed.

53.  First, in my judgment, Tang is entitled to rely on the ‘irregularity principle’.  This principle is well illustrated in the case of Re Green Valley Investment Ltd [2003] 2 HKLRD 915.  In that case, the defendants were directors and majority shareholders of a company.  They held an EGM and passed resolutions.  The plaintiffs were majority shareholders from China and did not attend the EGM as they had not received notice of the same.  The plaintiffs applied to court for declarations that the EGM was invalidly held.  It was held by Yuen J (as she then was) that valid notice of the EGM had not been given to the plaintiffs.  Nevertheless, the application had to be dismissed on the basis of the application of the ‘irregularity principle’. At pages 924 – 925, the learned Judge said as follows:

“ (c) ‘Irregularity’ principle

49. However, that is not the end of the matter. It has been well-established since MacDougall v Gardiner [1875] 1 Ch D 13 that the majority shareholders are the only persons who can complain about a technical miscarriage of a meeting.

50. James LJ expressly rejected the suggestion (put forward in the present case by Counsel for the plaintiffs) that minority shareholders are entitled to have a meeting held in strict form so that they could try to persuade the majority shareholders their way (at p.23):

Has a particular individual the right to have it [a meeting held in strict form in accordance with the articles] for the purpose of using his power of cloquence to induce the others to listen to him and to take his view? That is an equity which I have never yet heard of in this Court, and I have never known it insisted upon before; that is to say, that this Court is to entertain a bill for the purpose of enabling one particular member of the company to have an opportunity of expressing his opinions viva voce at a meeting of the shareholders. If so, I do not know why we should not go further, and say, not only must the meeting be held, but the shareholders must stay there to listen to him and to be convinced by him. The truth is, that is only part of the machinery and means by which the internal management is carried on.

51. In any event, as a matter of fact, it is unlikely that the plaintiffs would have been able to persuade the defendants the other way. They had all voted in favour of the Shanghai proceedings at the board meeting on 15 April 1998. In his proxy for the EGM, the third defendant had instructed the second defendant to vote in favour of the resolutions. The three defendants have all acted in unison in these proceedings.

52. The classic definition of the rule in Foss v Harbottle (1843) 2 Hare 461 as stated in Edwards v Halliwell [1950] 2 All ER 1064 was repeated in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at p.210. Irregularities in matters affecting internal management can be regularised by the majority shareholders in a properly convened meeting, so long as it would not constitute fraud on the minority. In the well-known case of Browne v La Trinidad (1888) LR 37 Ch D 1, Lindley LJ held:

… it is most important that the court should hold fast to the rule upon which it has always acted, not to interfere for the purpose of forcing companies to conduct their business according to the strictest rules, where the irregularity complained of can be set right at any moment.

53. In the present case, there is no fraud on the minority, because the resolutions were for the benefit of the Company, even though against the personal interest of the first plaintiff.

54.   In the circumstances, it is clear that the resolutions passed at the meeting of 2 May 1998 could always be confirmed by a majority vote of the first to third defendants at a meeting properly called with notice given to the plaintiffs.”

54.  Mr Law relies on the case of Billion Express Industrial Ltd v Tsang Hung Kong [2012] 5 HKC 51 and seeks to persuade me that the ‘irregularity principle’ should not be applied in a case where the decision taken at an invalid meeting was not just ‘a mere formality and irregularity’and that the present case is such.I am of the view that the present case is distinguishable from that case because that case concerned a board meetingof the directors and the present concerns a general meeting of the members. The learned Deputy Judge did make that distinction.  At page 75, the learned Deputy Judge said as follows:

“ 93. In this regard, it is in my view necessary to draw a distinction between a directors’ meeting and a shareholders’ meeting. There is a fundamental difference between the two, and in considering whether the irregularity principle applies to a given situation, one must not overlook the difference between these 2 types of meetings.

94. One particular difference between a directors’ meeting and a shareholders’ meeting arises from the fact that the board of directors is charged with the power and duty to manage the company. Unlike shareholders of a company, who are entitled to vote at general meetings solely in accordance with his own self-interest, directors are in a very different position. As observed by Deputy Judge To in the case of SEG Investment Ltd v SEG International Securities (HK) Ltd & Ors [2005] HKCU 1413, (unreported, HCMP 4211 of 2003, 14 October 2005, at para 11):

‘ Directors are agents of the company, they act in the interest of the company and less in the interest of those whom they represent or those who appointed them.  The purpose of a notice is to enable directors to attend the meeting so that the company may have the benefit of receiving the collective wisdom and contribution of all directors before deciding its action …’”

55.  The ‘irregularity principle’ is very much related to the principle that the court would not interfere with the internal management of a company.  There is ample authority in support of the latter proposition.  See, eg:

   (i)   the Green Valley case (supra), the Judgment of Yuen J at paragraph 52;

   (ii)   Kwok Ping Sheung Walter v Sun Hung Kai Properties Ltd [2009] 2 HKLRD 11 (CA) at paragraphs 19 and 20;

   (iii)   Yeung Bing Kwong Kenneth v Mount Oscar Ltd [2019] 1 HKLRD 572 at paragraph 22.

56.  Finally, the present application is made under section 42 of Cap 622 which reads as follows:

“ 42. Registrar must rectify information on Companies Register on order of Court

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

(a) the information derives from anything that—

(i) is invalid or ineffective; or

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

(b) the information—

(i) is factually inaccurate; or

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

(2) If, in relation to an application for the purposes of subsection (1), a document showing the rectification is filed with the Court, the Court may require the Registrar to rectify the information by registering the document.

(3) This section does not apply if the Court is specifically empowered under any other Ordinance or any other provision of this Ordinance to deal with the rectification of the information on or the removal of the information from the Companies Register.

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

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

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

57.  Even if I am wrong in my conclusions above, I am not satisfied of the matters set out in section 42(4) on the evidence adduced bythe Applicant.  More importantly, a winding-up petition has been presented by Yeung against the Company in HCCW 426/2016.  All the activities of the Company would practically have been frozen.  I cannot see how the information on the Companies Register, even if wrongly put and allowed to remain there, would cause material damage to the Company or how the Company’s interest in removing the information would outweigh the interest of other persons in the information continuing to appear on the Companies Register.

Conclusion

58.  In all the circumstance, I dismiss the application by the Applicant made in the Originating Summons.  I see no reason why the Applicant should not have to pay costs.  I therefore make an order nisi that the costs of and incidental to the application be paid by the Applicant to all the respondents to be taxed if not agreed.

59.  I wish to thank counsel on both sides for their able assistance.