WANG CHI KIEN v. SHEI TAI SHENG ENTERPRISES (HOLDINGS) LTD AND ANOTHER

HCMP 1910/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1910 OF 2003

(On appeal from HCMP No. 3068 of 1996)

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J U D G M E N T

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Hon Cheung JA (giving the judgment of the Court) :

Appeal against decision of a single judge

1. This is an appeal by Mr. Wang Wen Chin ("Mr. W. C. Wang) against the decision of Yuen J.A. sitting as a single judge of the Court of Appeal. Yuen J.A. refused to grant extension of time to Mr. W. C. Wang to appeal against the decision of Kwan J. dated 8 January 2003 in H.C.M.P. No. 3068 of 1996. The order of Kwan J. was sealed on 14 January 2003.

2. Mr. W. C. Wang had 14 days to appeal against the decision of Kwan J. The time expired on 28 January 2003. The application for extension of time to appeal against Kwan J.'s decision was made on 5 May 2003. There was a delay of three months.

Kwan J.'s Decision

3. The decision of Kwan J. was to refuse an application made by Mr. W. C. Wang to set aside the order of Rogers J. (as he then was) given on 12 September 1996 in H.C.M.P. No. 3068 of 1996. The application to set aside the order was made on 3 December 2002 which was more than six years after the order was first made.

Background

4. The background leading to the orders of Rogers J. was fully set out in the Reasons for Decision of Yuen J.A. Very briefly, Mr. W. C. Wang was a director and shareholder of a Hong Kong company called Shei Tai Sheng Enterprise (Holdings) Limited ("the Company"). The other directors were Mr. W. C. Wang's brother Mr. C. K. Wang and one Mr. Eddie Lau Chi Yam ("Mr. Lau"). Mr. C. K. Wang and one Mr. Tse Yee Kwan ("Mr. Tse") were the other shareholders of the Company. Mr. W. C. Wang said that Mr. Tse in fact had ceased to be a shareholder in 1990.

5. Between May and August 1996 Mr. C. K. Wang had called for two board meetings and one Extraordinary General Meeting of the Company for the purpose of convening an annual general meeting of the Company. However, these meetings were aborted because of the lack of quorum. Only Mr. C. K. Wang attended the meetings. Notices of these meetings were sent to the residential address of Mr. W. C. Wang in Bulkelly Street which was also the registered address of the Company.

6. After the inquorate meetings, Mr. C. K. Wang issued proceedings in the High Court namely, HCMP 3068 of 1996 asking for an order that, pursuant to section 114B of the Companies Ordinance, an EGM of the Company be convened in order to appoint Mr. C. K. Wang's son as a director of the Company and also to increase the share capital of the company so that the new shares could be allotted to Mr. C. K. Wang's son. The result would be Mr. C. K. Wong and his son would hold the necessary amount of shares to satisfy the quorum requirement. The parties to the proceedings were Mr. C. K. Wang as the applicant and the Company as the respondent.

7. Rogers J. granted the order. In December 1996, the Company issued a call on Mr. W. C. Wang's shares. However, Mr. W. C. Wang did not make the payment. His shares were forfeited and he was also removed as a director of the Company.

8. On 3 December 2002 Mr. W. C. Wang applied to be an intervener in HCMP 3068 of 1996 and asked for the orders of Rogers J. to be discharged.

Reasons for refusing the application

9. Kwan J. refused the application on the following grounds :

Yuen J.A.'s reasons

10. Yuen J.A. refused to grant extension of time to appeal against Kwan J.'s decision on the following grounds :

Exercise of discretion

11. Whether Yuen J.A. would grant extension of time or not was an exercise of her discretion. The principle is clear that the Full Court of the Court of Appeal when hearing an appeal from the decision of the single judge will not exercise the discretion afresh and cannot interfere with any exercise of discretion by the single judge, unless he erred in principle : Hong Kong Civil Procedure 2002, Vol. 1, Para. 59/14/26.

Delay

12. A delay of three months is obviously a substantial delay. As to the excuse for the delay, Yuen J.A. considered Mr. W. C. Wang did not have the intention to prosecute an appeal because after the order of Kwan J. he had on 14 January 2003 commenced a new action (H.C.A. No. 157 of 2003) against Mr. C. K. Wang. By a letter dated 17 March 2003 addressed to the court, Mr. W. C. Wang asked for this action to be stayed until the conclusion of the appeal against Kwan J.'s decision.

13. Mr. W. C. Wang had sought the assistance of the Bar Association Free Legal Service Scheme ("the Scheme"). The Scheme agreed to take up his case on 26 February 2003. On 12 March 2003 the solicitors appointed by the Scheme asked for permission to inspect the court file in H.C.M.P. 3068 of 1996. Permission was given to him on 18 March 2003. However, the present application for extension of time to appeal was only lodged on 5 May 2003 which was some weeks after the permission was first given.

14. Yuen J.A. considered that the relevant court documents filed in support of the section 114B application were not substantial. She considered that the excuse for the delay in this case was not acceptable. These are matters that Yuen J.A. was clearly entitled to take into account.

Merits of the appeal

15. In any event, irrespective of the question of delay, in our view Yuen J.A. was clearly right in holding that Mr. W. C. Wang had no real prospect of success in his proposed appeal.

Requirement of prompt action

16. First of all, Mr. W. C. Wang only applied to set aside Rogers J.'s order six years after the event. Mr. W. C. Wang claimed that his brother obtained the order of Rogers J. by fraud. He claimed that in July 1996 he was involved in litigation with his brother in Fujian in the Mainland. At the instigation of his brother his travel documents were detained by the authorities in the Mainland on 18 July 1996. His brother had not disclosed to Rogers J. in his section 114B application that Mr. W. C. Wang was prevented from travelling to Hong Kong because his travel documents had been detained.

17. Yuen J.A. considered that this non-disclosure could not be a relevant consideration because the application made by Mr. C. K. Wang was not an ex-parte application. The court documents were served on the Company at its registered address which was also the residential address of Mr. W. C. Wang. There was evidence that Mr. W. C. Wang's daughter had received one of the notices calling for the Board Meeting in May 1996 and she had informed Mr. C. K. Wang's solicitors that her father could not attend the Board Meeting scheduled for 13 May 1996. Mr. W. C. Wang sold his property in Bulkelly Street on 20 September 1996. He claimed that his children moved out from that address three months before it was sold. He also claimed that Mr. C. K. Wang knew that the Bulkelly Street property was no longer occupied and yet the court documents were still served at that address.

18. Mr. W. C. Wang's case on fraud was that his brother deliberately called for the meetings, obtained the court order and eventually forfeited Mr. W. C. Wang's shares well knowing he could not be in Hong Kong to defend his rights.

19. The court is clearly entitled to set aside a judgment obtained by fraud, but it is equally clear that an aggrieved party must act promptly to protect his interest as soon as he discovered the fraud.

20. Whatever the position may be concerning the service of court documents and the earlier service of the notice of company meetings, Mr. W. C. Wang was able to return to Hong Kong on 17 March 1997. By then, he knew of the order of Rogers J. and he clearly was in a position to challenge the order. However, he failed to commence court proceedings immediately to set aside the order. He merely wrote to the court in June 1998 asking the court to set aside the order of Rogers J.

21. He had also, on his return to Hong Kong, reported the fraud of his brother to the Hong Kong Police but he had not chosen to institute court proceedings. He obviously was aware of the need to make formal legal applications. He was not a stranger to litigation. He had commenced proceedings in the Mainland before. Clearly, the delay by him on his return to Hong Kong to set aside the order of Rogers J. was a relevant factor to be taken into account in considering whether he had a real prospect of success in his proposed appeal against Kwan J.

Standing of Mr. W. C. Wang

22. On the question of the standing of Mr. W. C. Wang, by the time he made the application before Kwan J. he was no longer a shareholder and director of the Company. Clearly, he did not have the standing to intervene and challenged an order that was made against the Company. We agree with Yuen J.A.'s view that Mr. W. C. Wang must first reinstate himself as a shareholder such as by seeking rectification of the register of members by reason of the Company's failure to give him proper notice to pay for the calls on his shares before he could succeed in intervening in the proceedings.

No real prospect of success

23. In our view, by reason of the substantial delay and the lack of standing of Mr. W. C. Wang, it is clearly showed that he had no real prospect of success in his appeal.

24. In our view, Yuen J.A. had properly considered all the relevant matters when she exercised her discretion against Mr. W. C. Wang. There was no error in principle.

Conclusion

25. Accordingly, we will dismiss Mr. W. C. Wang's appeal with costs to Mr. C. K. Wang.