PEDAGOGIC INNOVATIONS LTD v. HYDROGEN EVOLUTION INCORPORATED

HCA 945/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 945 OF 2013

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AND

HCCW 107/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 107 OF 2012

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D E C I S I O N
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The Application

1.  This is the Petitioner’s (“P’s”) application for the Petition to be consolidated or otherwise heard together with HCA 945/2013.  The 1^st Respondent (“R1”) opposes this application.

2.  The parties are legally represented.[1]

P’s Case

3.  P instituted the Petition for winding up of the company (R3) under sections 177(1)(f) and 168A of the Companies Ordinance, Cap 32 on the ground that it is unable to pay its debts and/or on the ground of unfair prejudice to P and that it is just and equitable to do so.[2]  In the Petition, P also seeks other remedies, which are not relevant for this application.

4.  P relies upon the acts of R1 and the second Respondent (“R2”), controlled by Mr. Mou Yiu Fai Tom (“Mou”), which P says are prejudicial and unfair to him, with the wrongful aim of removing him from the management of the company and misappropriating the company’s assets.[3]

5.  In HCA 945/2013, the plaintiff, who is P instituted the derivative action in the name of the company against Hydrogen Evolution Incorporated (“Hydrogen”), R2 in the Petition, on the grounds that Hydrogen had operated a business with R1 in competition with the company’s business; that it had transferred the company’s trademark to itself without valid authorization of the board of directors of the company; and that it had infringed the company’s trademark by allowing its business with R1 to use the company’s trademark.[4]  P therefore says that there are common issues between the Petition and HCA 945/2013 and both matters should be heard together by the same judge or consolidated.

R1’s Objection

6.  R1 does not dispute the above common issues of facts in paragraph 5 above.  It opposes the application on the following reasons:

a. The company would be wound up after a meeting on 2 March 2016.  It is doubtful if there is anything to be gained in terms of time and costs in continuing with the Petition;

b. There has been delay in the action; and

c. R1 is not a party to the action.  If the two actions were consolidated, R1 would be unnecessarily drawn into the dispute between P and R2 over the conduct of R2 as director of the Company.  Contrary to the views expressed in P’s submission, R1 has no part to play therein and has no intention to testify.   As far as R1 is concerned it is contrary to saving time and costs if the two actions are consolidated.[5]

Discussion

7.  The legal principles are not in dispute.

8.  The Court has a discretion to consolidate two actions under O.4, r.9 of  RHC where:

(a) That some common question of law or fact arises in both of them;

(b) That the rights to relief claimed are in respect of or arise out of the same transaction or series of transactions; or

(c) That for some other reason it is desirable to make an order for consolidation.

9.  The main purpose of the Court to order consolidation is to save costs and time (see para. 4/9/2 of Hong Kong Civil Procedure 2016).[6]

10.  It is obvious that there are common issues of facts between the Petition and the action.

11.  The former legal representatives of the defendants and respondents took the view that these two matters should be tried or heard together.

12.  R1’s argument relates to whether P should pursue the matters because of the consequences of voluntary winding-up of the company, which has nothing to do with the legal principles as set out in O.4, r.9 of RHC.  If P decides to continue with the matter, for whatever reasons, P should take the consequences, including the statutory effects of winding-up of the company under the Companies (Winding Up and Miscellaneous Provisions) Ordinance and costs.  If the matter should proceed, O.4, r.9 should apply and the matters should be tried together before the same judge.  So I order.

Costs and Order

13.  The costs should follow the event and the P’s costs should be assessed summarily under O.62, r.9A at the amount of $44,000 as R1 does not have objection to the costs as set out in the schedule.  Such costs are to be paid by R1 within 14 days from the date hereof.

Case Management Conference

14.  HCCW 107/2012 and HCA 945/2013 shall be heard and tried before the Companies Judge at the same time or to be determined by the Companies Judge.

15.  By consent, the matters are adjourned to a date to be fixed to be heard before the Companies Judge, with the following directions for HCA 945/2013:

a. The parties shall within 21 days from the date hereof file and serve the list of documents, followed by inspection within 7 days thereafter;

b. The parties shall exchange the witness statements within 28 days from the date hereof;

c. The parties shall file and serve the Listing Questionnaires for this action at least 7 days before the next Case Management Conference;

d. Liberty to apply;

e. Costs of this Case Management Summons be in the cause.