XCHRX Re Citiform Ltd.

HCCW 1107/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 1107 OF 1999

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R U L I N G

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1. On 18 January 2000, Messrs Pang, Wan & Choi issued a summons purporting to act for the Company and asking for an order under section 182 of the Companies Ordinance, commonly referred to as a validation order.

2. In April 2000, the Petitioner filed an affirmation in which she disputed the authority of Messrs Pang, Wan & Choi to act for the Company and she also disputed the authority of the board of directors of the Company to make the affirmation in support of the summons for a validation order.

3. In this affirmation filed in April 2000, the Petitioner, who is a director of the Company, says that she had never received any notice of any meeting of the board of directors at which it was proposed to authorise Mr Hung Shun Luk to make any affirmation or to engage Messrs Pang, Wan & Choi to undertake legal work in connection with these or any other legal proceedings.

4. In previous correspondence, the Petitioner's solicitors had put Messrs Pang, Wan & Choi on notice that she did not accept that it had been properly appointed or authorised to conduct the current proceedings on behalf of the Company, and enquiries were made as to when any notice of the meeting of the board of directors (if any) had been given.

5. It would now appear from the evidence filed purportedly on behalf of the Company that no notice had ever been given to the Petitioner as a director of the Company for the passing of any resolution authorising Mr Hung to make an affirmation on behalf of the Company and appointing Messrs Pang, Wan & Choi as solicitors to act on behalf of the Company.

6. It was only on 26 May 2000 that a notice was given for a meeting to be held on 14 June 2000 for the purpose of considering the following agenda, namely

1. to confirm Messrs Pang, Wan & Choi as solicitors for the Company in the present proceedings, and

2. to ratify and approve the validity of the minutes of the meeting of the board of directors purporting to authorise Mr Hung to take appropriate steps for opposing the petition and to instruct solicitors and counsel to represent the Company in the winding-up proceedings.

7. In my view, since April 2000 from the 2nd affirmation of the Petitioner, the other directors of Company and the solicitors purporting to act on behalf of the Company would have been made aware that this was a point that was to be taken. For some reason which is not explained to me, nothing was done to ratify the appointment of solicitors and to authorise the director Mr Hung to make these affirmations until 26 May. The result of that is that at the hearing today, the meeting for ratification has not yet been held.

8. Accordingly, in the exercise of my discretion I consider it appropriate that as far as proceedings today are concerned, that it should be adjourned to a date not before 7 days from today to enable that meeting to take place and to see what the result of that meeting would be. I decline, in the exercise of my discretion, to dismiss the present application at the invitation of counsel for the Petitioner because it appears to me that it would be an unnecessary waste of costs and time for the present application to be dismissed, only to be asked to set it aside again should the meeting of directors result in ratification. Accordingly, I would order the present hearing to be adjourned to a date not before 7 days from today.

9. Since April 2000, the Petitioner has deposed on affirmation to her not having received notice of any meeting of the board of directors for the purposes of appointing solicitors for the present application. Therefore since April 2000, the solicitors would have had ample time to deal with the matter, including the giving of notice for a meeting to ratify the December 1999 resolution of the company. For reasons which are completely unexplained, they did not do so until a date such that the meeting has still not been validly held and the meeting is not going to take place until two days after today.

10. Accordingly, in my view, the costs of today's hearing of the section 182 application have been wasted as a result of the delay on the part of the remaining directors of the Company and those advising them, and in my view, this is a discrete set of costs which have nothing to do with the merits or otherwise of the petition.

11. Accordingly, I would order, in my exercise of my discretion, that the costs of today's hearing of the section 182 application be borne by Messrs Pang, Wan & Choi.