WONG PUI YIN GEORGEANNA (as the administratrix of the estate of WONG CECILIA PUI LUEN, deceased) v. CHEER CREATION LTD AND ANOTHER

CACV 218, 219 & 220/2023 & CAMP 351, 352 & 353/2023
(Heard together)

[2024] HKCA 489

On Appeal From [2023] HKCFI 1663

CACV 218/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 218 OF 2023

(ON APPEAL FROM HCMP NO 800 OF 2022)

________________________

________________________

________________________

CACV 219/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 219 OF 2023

(ON APPEAL FROM HCMP NO 801 OF 2022)

________________________

________________________

________________________

CACV 220/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 220 OF 2023

(ON APPEAL FROM HCMP NO 802 OF 2022)

________________________

________________________

________________________

CAMP 351/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 351 OF 2023

(ON AN INTENDED APPEAL FROM HCMP NO 800 OF 2022)

________________________

________________________

________________________

CAMP 352/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 352 OF 2023

(ON AN INTENDED APPEAL FROM HCMP NO 801 OF 2022)

________________________

________________________

________________________

CAMP 353/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 353 OF 2023

(ON AN INTENDED APPEAL FROM HCMP NO 802 OF 2022)

________________________

________________________

________________________

(Heard together)

________________________

DECISION

________________________

Hon G Lam JA:

1.  This is my decision on the Intervener’s applications for stay of execution of the orders below pending his appeals in CACV 218, 219 & 220 of 2023, and the directions I give on the Intervener’s applications for leave to appeal in CAMP 351, 352 & 353 of 2023.

2.  These proceedings concern 3 Hong Kong companies the beneficial ownership of which is in dispute, namely, Hiroshi Technologies Ltd (“Hiroshi”), Cheer Creation Ltd (“Cheer Creation”), and Elite Giant Ltd (“Elite Giant”). 

3.  In the case of Hiroshi, 19,999 shares out of its 20,000 issued shares were held in the name of Wong Cecilia Pui Luen (“Cecilia”), with the remaining 1 share held in the name of Cheer Creation.  Cheer Creation itself has 2 issued shares, 1 of which was held in the name of Cecilia and the other in the name of Elite Giant.  Elite Giant’s 2 issued shares were in turn held by Cecilia and Cheer Creation respectively.

4.  The two directors of Hiroshi were Cecilia and Cheer Creation.  The two directors of Cheer Creation were Cecilia and Elite Giant; and the two directors of Elite Giant were Cecilia and Cheer Creation.

5.  Cecilia died on 18 December 2020.  On 4 May 2021, her sister, Wong Pui Yin Georgeanna (“Georgeanna”), obtained letters of administration in respect of her estate.

6.  Lee Chi Wang (“CW Lee”)  had been in a romantic relationship with Cecilia.  He said that he has all along been the beneficial owner of the three companies, and that the shares in the 3 companies registered in Cecilia’s name were held by her on trust for him.  This is not accepted by Georgeanna.

7.  On 9 February 2022, CW Lee commenced an action (HCA 176 of 2022)  against, among others, Georgeanna as administratrix of Cecilia’s estate, Hiroshi, Cheer Creation and Elite Giant (“Main Action”).

8.  On 24 June 2022, Georgeanna issued an originating summons in respect of each of Hiroshi, Cheer Creation and Elite Giant (HCMP 800, 801 & 802 of 2022), seeking (1) an order under sections 158-159 of the Companies Ordinance (Cap 622)  that the company in question register Georgeanna as the holder of the shares hitherto held in Cecilia’s name; (2) in so far as necessary, an order under section 633 for rectification of the register of members; and (3) further or alternatively, an order under section 570 that a general meeting of the company be held and that the resolution set out in the originating summons (namely, that Wong Wing Hong Joseph, the brother of Cecilia and Georgeanna, be appointed a director of Hiroshi, and that Georgeanna be appointed a director of Cheer Creation and Elite Giant)  be deemed passed.  I shall refer to these three sets of proceedings as the “OS proceedings”.

9.  On 7 July 2022, CW Lee issued a summons in each of the OS proceedings seeking an order that (1) he be joined as intervener; and (2)  the proceedings be stayed pending the determination of the beneficial ownership of the shares in Cecilia’s name in the company concerned in the Main Action.

10.  On 7 September 2022, Ng J gave directions for the filing of further evidence on and for the hearing of CW Lee’s summonses for stay.  The originating summonses were stayed pending final determination of CW Lee’s summonses.

11.  On 26 April 2023, CW Lee’s summonses for intervention and stay were heard by Harris J.  There was no opposition to CW Lee’s joinder as intervener, which was granted.  The hearing was adjourned to allow the parties time to attempt to reach consensus.  The direction given in each case was that the parties do submit an agreed consent summons by 5 May 2023, “failing which the Court shall determine [CW Lee’s] Summons on paper”.

12.  When the matter could not be resolved by agreement between the parties, the judge proceeded to make a decision without a further hearing.  By his judgment handed down on 28 June 2023,[1] however, the judge not only dismissed CW Lee’s applications for stay, but also gave judgment in favour of Georgeanna on her originating summonses, ordering that each company register Georgeanna as the holder of the shares hitherto registered in Cecilia’s name, that the register of members be rectified accordingly, and that a general meeting be convened and that the specified resolution for the appointment of a director be deemed passed as at the date of the order.

13.  On 12 July 2023, CW Lee lodged appeals against Harris J’s orders in the OS proceedings.  The appeals are now numbered CACV 218, 219 & 220 of 2023.  CW Lee also sought leave from the judge to appeal against the dismissal of his summonses for stay of the OS proceedings pending the Main Action.  This was dealt with by the judge on paper, and dismissed by his decision dated 10 November 2023.[2]

14.  CW Lee has since issued summonses in this court for stay of execution of Harris J’s orders in the OS proceedings pending the determination of his appeals.  He has also issued summonses in this court (CAMP 351, 352 & 353 of 2023)  seeking leave again to appeal against the judge’s refusal to stay the OS proceedings pending the Main Action. 

15.  CW Lee has raised two main grounds of appeal in CACV 218, 219 & 220 of 2023.  First, he contends that there was a serious procedural error for the judge to give judgment on the originating summonses when (1) they were not listed for hearing before him on 26 April 2023, (2) the judge did not indicate to the parties that he intended to make a substantive ruling on the originating summonses, and (3) CW Lee had had no opportunity to file evidence and make submissions on the originating summonses.

16.  (1)  and (2)  seem to be undisputed.  The judge said this in §7 of his Judgment dated 28 June 2023:

“ The originating summonses were not listed before me for hearing on 26 April 2023, but having dismissed Mr Lee’s application it seems to me that the order sought by the Plaintiff should obviously be granted and it is unnecessary to have the originating summonses listed for a further hearing.”

17.  In fact it appears that the OS proceedings had remained stayed by order of Ng J dated 7 September 2022 pending the determination of CW Lee’s summonses for a stay until the determination of the Main Action.  In CW Lee’s solicitors’ letter to the judge’s clerk dated 5 May 2023, he asked for an opportunity to file written submissions on, inter alia, directions in respect of the further conduct of the originating summonses, which suggests that he had not appreciated that the originating summonses would be finally determined by the judge.  In Georgeanna’s solicitors’ letter to the judge’s clerk dated 9 May 2023, it was stated that the court was “only concerned with [CW Lee’s] stay summonses” and “should only focus on the stay summonses”.

18.  As to (3), the judge said this in his Decision dated 10 November 2023 at §4:

“ I took the view that the Intervener had had the opportunity to advance evidence and submissions in opposition to the Originating Summonses, albeit the evidence and submissions were filed in respect of the applications for a stay, but there was nothing to suggest that the Intervener had any more to say either by way of evidence or argument if the stay application failed as the grounds for seeking a stay could be the only grounds for opposing the Originating Summonses.”

19.  I have had regard to the counter-arguments raised by Ms Sit SC in opposition to the present applications but it seems to me at this stage at least reasonably arguable that CW Lee had not filed all the evidence and made all the submissions on the originating summonses that he would have wanted to and could properly have filed and made if he had the opportunity.  It is also reasonably arguable that it was not sufficient to justify proceeding to judgment at once on the originating summonses based on the view that “there was nothing to suggest that [he] had any more to say” in the absence of confirmation from CW Lee to that effect and in the absence of any finding that there was no reasonable possibility that he could have put forward any additional evidence or submission material to the issues before the judge. It follows that there are real prospects of showing that there was an irregularity in the court giving judgment in favour of Georgeanna upon the originating summonses without giving CW Lee an opportunity to be heard.

20.  The second ground of appeal contends that the judge failed to direct himself in accordance with the approach established by authorities that where there is a pending dispute over the beneficial ownership of shares, such dispute should generally be resolved before the court exercises its powers under sections 159, 570 and 633 to order registration, rectification or a general meeting.  It is also said that the judge failed to take into account the possibility of the appointment of an interim receiver and wrongly assumed that the companies would be left without steer if the originating summonses were not granted.

21.  It is unnecessary to discuss the merits of the second ground, since the first ground is, in my view, sufficient to warrant a stay of execution, having regard to all the circumstances including its prospects and the potential prejudice to CW Lee should the orders not be stayed.  The prejudice referred to stems mainly from the fact that Hiroshi and certain subsidiaries of Cheer Creation and Elite Giant are companies with trading businesses and that the orders, if not stayed, give the entire control of these companies and businesses to Georgeanna and her brother.  The undertakings given by her and accepted by the judge, namely, not to dispose of the assets of Hiroshi other than in its normal course of business, and not to dispose of the assets of Cheer Creation and Elite Giant without leave of the court, do not in my view alter the ultimate balance for present purposes given that we are concerned with trading businesses.

22.  It should also be noted that in the originating summonses relating to Cheer Creation and Elite Giant (HCMP 801 & 802 of 2022), there is a 2^nd defendant, namely, e-Corporate Service Ltd (“e-Corporate”), a company which had apparently been providing company secretarial services to Cheer Creation and Elite Giant.  It had decided not to take part in CW Lee’s summonses for stay of the OS proceedings pending the Main Action, and therefore did not appear at the hearing before the judge on 26 April 2023.  After judgment was given in the originating summonses, it too applied to the judge for leave to appeal.  The judge granted e-Corporate leave to appeal for the reason that he had “proceeded on the mistaken assumption that [e-Corporate] was neutral as to the order to be made on the Originating Summonses in HCMP 801 and 802”.[3] The judge also stayed the orders in HCMP 801 and 802 of 2022 as against e-Corporate pending its appeals.

23.  On 28 February 2024, e-Corporate’s appeals from HCMP 801 and 802 of 2022, namely, CACV 226 and 227 of 2023, were allowed by consent, with the orders for registration of Georgeanna as shareholder and rectification of the register of members, inter alia, set aside in so far as e-Corporate is concerned.

24.  As for CW Lee’s applications for leave to appeal against the judge’s refusal to stay the OS proceedings pending the Main Action (CAMP 351, 352 & 353 of 2023), given the existence of his extant appeals in CACV 218, 219 & 220 of 2023, I consider it expedient that there should be a rolled-up hearing of these leave applications and, if leave is granted, the appeals themselves, to be heard at the same time as CACV 218, 219 & 220 of 2023.

25.  I therefore make the following orders:

(1)  In each of CACV 218, 219 & 220 of 2023, paragraphs 3 to 5 of the order of Harris J dated 28 June 2023 in HCMP 800, 801 or 802 of 2022, as the case may be, be stayed pending the determination of the corresponding appeal.  The costs of the applications for stay of execution be in the cause of each appeal.

(2)  In each of CAMP 351, 352 & 353 of 2023, there be a rolled-up hearing of the application for leave to appeal and, if leave is granted, the appeal itself, to be fixed at the same time as the hearing of CACV 218, 219 & 220 of 2023.

(3)  A set of composite hearing bundles (covering all 6 sets of proceedings)  should be prepared and agreed, subject to the approval of the Registrar of Civil Appeals.

(4)  Combined skeleton arguments (covering all 6 sets of proceedings)  of no more than 20 pages are to be lodged, otherwise in accordance with Practice Direction 4.1.