CAI XIU FENG v. YEUNG YUNG AND OTHERS

HCMP 570/2024

[2025] HKCFI 414

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 570 OF 2024

____________________

____________________

BETWEEN

____________________

_________________________

REASONS FOR DECISION

__________________________

1.  At the adjourned hearing on 17 January 2025 of the application of Cai Siu Feng (“P”) by originating summons dated 5 April 2024 (the “OS”), the Court granted an order that the Notice of Change of the Company Secretary and Director (Appointment/Cessation) No. 23601923216 dated 9 November 2023 and filed on 9 November 2023 in respect of FU WAI INDUSTRIAL COMPANY LIMITED (富偉實業有限公司) (the “Impugned Document”) be declared null, void and of no legal effect with consequential relief.

2.  The defendants to the application are Yeung Yung (“D1”), Ken So Secretary Limited (“D2”), Fu Wai Industrial Company Limited (the “Company”) and Registrar of Companies (the “Registrar”).

3.  No acknowledgement of service has been filed by D1 or D2. The Company filed its acknowledgement of service stating that it does not intend to contest the proceedings.

4.  On 7 May 2024, the Registrar submitted its Statement pursuant to section 43 (2) of the Companies Ordinance, Cap. 622 (“CO”) (the “Statement”) and is neutral to the relief sought under the OS except for minor amendments to phraseology in §§4 and 5 of the OS which P accepts.

Procedural history

5.  The 1^st hearing came before Recorder Richard Khaw SC on 4 June 2024 (the “June hearing”) which D1’s then solicitor[1] attended, albeit without any acknowledgement of service having been filed. D2 was absent.

6.  D1 was granted leave to file his acknowledgement of service out of time and directions were also given for the filing of evidence by D1 and P (the “June order”).

7.  Subsequent to the June order, P and D1 reached a consensus reflected in the consent summons of 17 June 2024 which essentially mirrored the relief sought in the OS (but taking into account the amendments proposed by the Registrar) and providing that the action be dismissed against D1 with no order as to costs.

8.  In the Court’s letter of 28 June 2024, P was requested to:

(a) address 3 matters, namely:

(i) inconsistencies in P’s case that were pointed out at the June hearing;

(ii) HKCP Vol 1 15/16/2; and

(iii) §34 of the Statement; and

(b) consider whether or not there should be a court hearing.

9.  P’s attempt to address those concerns were unsuccessful and directions were given that the OS be heard which came before this Court on 31 October 2024.

10.  Notwithstanding the June order, D1 did not file any acknowledgement of service nor any affirmation in opposition to P’s application. Instead, on 5 August 2024, he filed a notice to act in person. As a result, there was no occasion for P to file any affirmation in reply.

11.  At the hearing on 31 October 2024, P was granted leave to file a supplemental affirmation to address the inconsistencies previously raised (described in §§20-21 below) which largely arose from the WhatsApp communications (allegedly involving P) that were before the Court at the June hearing.

Relevant background

12.  The Company was incorporated in November 2002. Cai Wei Ming (the “Deceased”) and P (his wife) were the only shareholders, each holding 1 share in the Company.

13.  After the allotment of additional shares in the Company on 10 December 2002, until his death on 19 August 2020, the Deceased held 70% of the issued shares with P holding 30%. On the same day P was appointed its company secretary.

14.  The Deceased and P were also the only directors of the Company: see the Annual Returns (“ARs”) of the Company for the years 2021 and 2022.

15.  P remains a shareholder. According to records kept at the Companies Registry (“CR”), immediately before the registration of the Impugned Document, P remained the sole director and company secretary of the Company.

16.  P’s 2023 AR, was prepared by the accountant Lui Mei Shan on P’s instructions (as was the case for the 2021 and 2022 ARs). It was submitted to the CR for filing and registration on 13 November 2023. However, it was rejected and returned by the CR on 23 November 2023. Despite its resubmission on 29 November 2023, the CR has withheld registration.

17.  It was upon a search being conducted subsequent to the rejection of P’s 2023 AR that P came to learn of the Impugned Document for the 1^st time and that the CR had registered the same on 9 November 2023.

18.  According to the Impugned Document,

(a) the Company was the presenter delivering the Impugned Document;

(b) P ceased to be company secretary on 9 November 2023;

(c) the company secretary had been changed from P to D2 on 9 November 2023;

(d) D2 (through an unknown person) had signed the consent to act as company secretary;

(e) D1 had been appointed a director of the Company on 9 November 2023; and

(f) D1 had signed the consent as director.

19.  It was also discovered that D1 and/or D2 had wrongfully and/or falsely caused the AR of the Company for 2023 to be submitted to the CR for registration on 9 November 2023 (“D1 and D2’s 2023 AR”) and resubmitted on 5 December 2024. However, its registration has also been withheld.

20.  P’s case is that prior to discovering the Impugned Document and its contents:

(a) P had no knowledge of D1 or D2;

(b) P maintains that she still is the company secretary and had and has no intention of ceasing to act in that capacity;

(c) at all relevant times no shareholders’ meetings and no director’s meeting were convened to appoint D1 as director of the Company or to appoint D2 as company secretary in place of P;

(d) P, as sole director of the Company, has never appointed D1 to be a director of the Company or D2 to act as company secretary;

(e) there could not be any shareholder or director other than P who could make the appointments of D1 or D2 as alleged; and

(f) the Impugned Document and D1 and D2’s 2023 AR had been filed without any proper authorisation and must be invalid.

21.  Apart from writing to the CR on 28 November 2023 to raise complaints and concern, P also lodged a formal complaint to the police on 29 November 2023.

Applicable legal principles

22.  For present purposes, the relevant statutory provisions to be found in section 42 (1), (4) and (5)[2] of the CO.

23.  The relevant principles are conveniently set out by DHCJ Roxanne Ismail SC in Chan Ting Fo v Wong Tsz Hong and Others [2023] HKCFI 3211 at §§8-10:

(a) The principles governing section 42 (1) and (4)[3] have been summarised in Wang Zhihua v Registrar of Companies [2020] HKCFI 2873 at §22 as follows:

“(1) Section 42(4) prescribes and restricts how the Court’s power to order removal of information may be exercised. Removal is to be ordered only if (i) the plaintiff has shown that registration of a document showing the rectification is not good enough; the continuing presence of the incorrect information will cause material damage to the company; and (ii) the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the register.

(2) The fact that the information is incorrect, or relates to an invalid or ineffective transaction, or has been filed without proper authority of the company in question or that a document is a nullity or is one that should never have been registered, is not in itself a sufficient reason for removing it as opposed to rectifying it.

(3) The order made by the Court is to be registered, so that the basis of the rectification (or removal) ought to be apparent from an inspection of the record.”

(b) If there is a prospect of damage being caused to the company by the information on the register, that in itself would justify removal: Forever Up Holdings v Tong Yan Wa [2018] HKCFI 2775 [2019] 5 HKC 478 per DHCJ William Wong SC at §16.

(c) In Cheung Wai Man Elmo v Ko Hok Shing and Others [2022] HKCFI 3668, Harris J. made a s.42 order stating at §5:

“Given the fact that it would appear the 1st Defendant for unexplained reasons has filed falsified documents in the Companies Registry which necessarily might lead to the confusion in the mind of anybody inspecting it, I accept the Plaintiff’s argument that this is an appropriate case in which to order that the documents which should never had been filed are removed from the Companies Registry, rather than that the Companies Registry are required to alter what is already filed.”

24.  As regards the issue whether declaratory relief should be granted by consent, HKCP 2024 at §15/16/2 cites from Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 inter alia, as follows:

“… the rules of the court that a declaration would not be granted when giving judgment by consent or in default without a trial is a rule of practice not of law and will give way to the paramount duty of the court do the fullest justice to the plaintiff to which he is entitled.”

25.  That principle was applied by the Court in Lam Shing Shou v Lam Hon Man, HCA 361/2001, unrep., 15 January 2002 (at §13) when granting judgment in default of defence and giving declaratory relief in relation to challenges to succession of property rights on a person’s death. QL Credit Gain Finance Co Ltd v Bok Fat Yuen Spender [2021] HKCFI 679 is another example of the Court making declaratory orders where it is satisfied that they give the fullest justice to the parties.

The June hearing

26.  The evidence then before the Court included documents submitted by Bill Lau, (holding himself out as the manager of D2) in response to the CR’s letter of enquiry of 22 of March 2024. Inter alia, they show a group chat between 秀鳳 Xiu Feng, D1 and Bill Lau. Those documents are WhatsApp messages allegedly exchanged among D1, Bill Lau and Xiu Feng (who is shown as having a Hong Kong contact number[4]) and are said to show[5] that the filing of the relevant documents by D2 was within P’s knowledge.

27.  There is also a letter dated 2 February 2024 from Messrs Eric Yu & Co (“Eric Yu”) (allegedly acting for D1) claiming that:

(a) D1 had entered into a loan agreement with the Company (through the Deceased) on 5 November 2018 secured by land owned by the Company pledged to D1;

(b) when the loan became due on 4 November 2019 and was not paid, the Deceased signed certain “share transfer document” as security;

(c) when no reply was forthcoming from the Company after the Deceased’s death, Eric Yu was instructed to submit the documents relating to the share transfer for filing and registration.

28.  However, Eric Yu did not respond to the letter from P’s solicitors of 15 February 2024 denying those allegations.

29.  While P’s counsel reiterated P’s denial that the person shown as having the Hong Kong contact number was P, there was no such evidence before the Court, thus giving rise to the observations made at the June hearing.

30.  Pursuant to leave granted on 31 October 2024, P filed her 2^nd affirmation on 10 December 2024 to the effect that:

(a) the alleged “秀鳳Xiu Feng (of the number + 852 9735 7366)” in the WhatsApp chat group as shown in exhibit CR-10 to the Statement was not P;

(b) at all relevant times P was in Mainland China and did not and does not have the WhatsApp number shown in the messages;

(c) P did not know and does not know Bill Lau.

P’s application

31.  It is telling that neither D1 (the main protagonist) nor D2 sought to appear at the hearings on 31 October 2024 and 17 January 2025. Nor, having submitted documents to the CR and P which caused questions to be raised, did either of them see fit to follow through by adducing evidence in opposition despite having the opportunity to do so. Instead, having thrown a spanner in the works of P’s application, they have simply vanished.

32.  In those circumstances, no weight or significance should be given to the ‘information’ made available by D1 and D2 in P’s application. They should simply be ignored.

33.  It is clear that D1 could not have been appointed a director of the Company and D2 could not have been appointed company secretary without a shareholders’ meeting or meetings (whether AGM or EGM) or a board meeting or meetings having been convened and held for that purpose. P, as a shareholder and sole director at the relevant time was not aware of any such meeting.

34.  As earlier noted, the Registrar adopts a neutral position to the relief sought.

35.  The contents of the Statement are consistent with P’s evidence. Specifically,

(a) immediately before the registration of the Impugned Document on 9 November 2024, P remained the sole director of the Company[6];

(b) immediately before the registration of the Impugned Document on 9 November 2024, P remained the only secretary of the Company[7]; and

(c) immediately before the submission of D1 and D2’s 2023 AR, the Deceased and P remained 70% and 30% shareholders of the Company respectively[8].

The Order

36.  Having regard to the evidence, I am satisfied that the Impugned Document purporting to give notice of change of the company secretary and director dated 9 November 2023 was forged, false and done without the Company’s authority.

37.  The declaration sought was granted because without such a declaration (that the Impugned Document be declared null, void and of no legal effect), P would not obtain the fullest justice to which she is entitled.

38.  Pursuant to section 42(8) of the CO, P shall deliver an office copy of the order to the Registrar for registration.

39.  Accordingly, the Impugned Document must be removed from the CR. P is granted leave to rectify the information in the CR to reflect the declaration granted.

40.  At the June hearing, an issue arose as to the Court’s jurisdiction to order the removal of documents that are pending registration under section 42 such as D1 and D2’s 2023 AR.

41.  The learned Recorder invited attention to Chan Pui Sze v Perfect Star Credit Limited and Others [2021] HKCFI 674 where the Court referred to the suggestion of the Registrar that documents that had not been registered on the “Companies Register” (i.e. documents pending registration) could not be rectified or removed given its definition in section 2 of the CO as “the records kept under section 27”[9]. In view of those comments, the plaintiff in that case decided not to seek an order to rectify or remove the unregistered documents. The Court did not therefore have to rule on that issue which remains open.

42.  D1 and D2’s 2023 AR is demonstrably false and so cannot be a document that the Registrar would decide to register. It follows that it would not be a document that the Registrar is duty-bound to keep in the CR.

43.  D1 and D2’s 2023 AR is described as “pending”, presumably in the Document Index Search at the CR in respect of the Company. The notion that a document which cannot be shown to be a document that the Registrar would decide to register should continue to be shown as “pending” indefinitely makes no sense.

44.  Indeed, it is to be noted that in the present case the Registrar’s proposed amendment to §4 of the OS achieves the desired result by recasting the relief sought: instead of “removal” of D1 and D2’s 2023 AR, the same is to be “refused for registration”. Clearly it is well within the Registrar’s remit to do so.

45.  Finally an order was also made that P’s 2023 AR be accepted for registration.

Costs

46.  P applied for costs against D1 and D2 and submitted a statement of costs at the conclusion of the hearing.

47.  D1 and D2’s conduct in this matter is deprecated for the reasons set out in §31 above. In the present case, they have acted irresponsibly. I therefore ordered that D1 and D2 bear P’s costs incurred in these proceedings, such costs to be summarily assessed and dealt with in chambers.