RE GLORY PLANT INDUSTRIAL LTD

HCCW 724/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 724 OF 2002

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D E C I S I O N

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1. I have before me a summons issued by the petitioner, Mr Yu Chi Ming ("Mr Yu") on 10 January 2003 to strike out paragraphs 16 to 21 and 22 to 24 of the Points of Defence filed by the 1st respondent, Madam Chiu Yee Wah, Catherine ("Madam Chiu") on the ground of abuse of process of the court, that the paragraphs complained of are frivolous and vexatious and tend to prejudice, embarrass or delay the fair trial of the petition. The basis for the strike out application as appears from the summons is that the offending paragraphs raise the same issues as raised in paragraphs 8 to 14 and 15 to 16 of the Statement of Claim filed by Madam Chiu as the plaintiff in High Court Action No. 2820 of 2002 ("the High Court Action").

2. The petition herein was presented on 4 July 2002 for winding up of Glory Plant Industrial Ltd ("the Company") and for buy-out relief under section 168A of the Companies Ordinance, Cap. 32.

3. On 7 October 2002, I ordered pleadings be filed in these proceedings because the evidence filed by the parties by then is so prolix and messy that makes it difficult for one to discern what are the allegations relied on in support of the case for relief and the allegations relied on in opposition to the reliefs sought. Pursuant to my order, Points of claim was served and filed by Mr Yu on 17 October 2002 and on 31 October 2002 Madam Chiu filed and served her Points of Defence.

4. As I understand from the submissions made by Mr K H Ting on behalf of Mr Yu, it is accepted that the facts pleaded in the offending paragraphs of the Points of Defence are relevant to Madam Chiu's opposition to the petition. These paragraphs, which I do not propose to set out, go to the issue if Mr Yu has come to court to seek winding up relief and relief under section 168A with clean hands.

5. The objection taken by Mr Ting is that the allegations in these paragraphs are in respect of the same issues raised in the High Court Action and "unless and until Chiu makes up her mind where to make her claims, Yu does not know where to respond to these claims". If this is meant to be a suggestion that it is oppressive for Madam Chiu to make the same allegations as she has done in the High Court Action, I see no substance in this complaint, certainly not a complaint sufficiently serious to warrant a striking out.

6. The allegations raised in the High Court Action are to found a derivative action brought on behalf of the Company on the basis that there was breach of fiduciary duties of Mr Yu as a director. That these same allegations would also go to establish that Mr Yu has not come to court with clean hands in the petition for the winding up of the Company and for relief under section 168A does not mean that Madam Chiu is not entitled to raise them in the winding up proceedings. This should have been clear to anyone from the start.

7. An additional basis for striking out was made in the written submissions of Mr Ting and in his oral submissions today. It is said that the offending paragraphs in the Points of Defence were pleaded not merely as a defence but they establish in effect a counterclaim apart from providing a defence. In the concluding parts of the Points of Defence, Madam Chiu seeks dismissal of the petition, she claims for an order that Mr Yu be required to buy out her shares in the Company and damages to be assessed.

8. In my view, the offending paragraphs in the Points of Defence serve a dual purpose. They go to support Madam Chiu's case why Mr Yu should be denied the relief sought. They also establish her case of unfairly prejudicial conduct on the part of Mr Yu so that Mr Yu should be ordered to buy out her shares. I fail to understand how this could afford a basis for striking out. It is not necessary for the purpose of this application to go into the question if Madam Chiu is entitled in these proceedings to claim damages on behalf of the Company. This is something she has already done in the High Court Action which is a derivative action. The claim for damages in the Points of Defence is not among the parts sought to be struck out by Mr Yu in his summons.

9. Arguments were also made on behalf of Mr Yu on res judicata. They seem to me equally groundless and I need say no more about this.

10. For the above reasons, I dismiss the striking out application.

11. As for costs, I think it would be appropriate to make an order that Mr Yu is to pay Madam Chiu's costs forthwith as Mr Yu's application is misconceived and has not been properly formulated. I have assessed costs on a gross sum basis at HK$20,000.00.