CHOI TAK LAN AND OTHERS v. NG WING HONG AND ANOTHER

CACV 267/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 267 OF 2008

(ON APPEAL FROM HCMP NOS. 2670, 2671 AND 2672 OF 2006)

HCMP 2670/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2670 OF 2006

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(CONSOLIDATED BY THE ORDER OF THE HONOURABLE

MR JUSTICE BARMA DATED 1^st MARCH 2007)

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.  This was the second and third plaintiffs’ application for leave to appeal to the Court of Final Appeal pursuant to section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484.  At the conclusion of the hearing the application was refused with reasons to be handed down which we now do.

2.  The main issue that arose before Mr Recorder Jat SC was the validity of the “November Allotment”, namely:

“ … whether the issue and allotment of 237,436 new shares in Data World, effected on or about 30 November 2004, pursuant to shareholders and board resolutions signed by its registered shareholders and directors, and corresponding transfer of shares in Nexus and Data China consequent on the change in the shareholding percentages in Data World, are valid.”

3.  The questions of great general or public importance said to arise relate to the November Allotment.  The relevant background facts can be found in §§ 2-12 and 24 of the reasons for judgment to which reference should be made.

4.  The recorder, in making findings of fact relating to (1) the agreement reached at a meeting held on 12 November 2004 and (2) the events that occurred during the period between 12 November 2004 and the November Allotment of 30 November 2004 (“the intervening period”), essentially rejected the plaintiffs’ evidence.  Apart from making specific findings as to what had been agreed at the November meeting, the recorder also considered the corporate documents authorising the November Allotment that had come into existence during the intervening period.  These included a notice convening an EGM for 30 November 2004 in which one of the resolutions to be passed was to give the directors “general and unconditional approval for the purpose of section 57B” to issue the company’s unissued capital, written consent by the plaintiffs to short notice for the EGM, minutes of the EGM, and written resolutions of the board to make the November Allotment to which, inter alia, the second and third plaintiffs’ signatures had been appended.  On the facts as found by him, the recorder concluded that all the shareholders had given their consent to the November Allotment.

5.  By the time the appeal to this court was heard, the plaintiffs had abandoned any challenge to those factual findings.

6.  The questions said to be of great general or public importance as set out in the notice of motion are the following:

“ a.   Whether, under S.57B of the Company Ordinance (Cap. 32), a company, having resolved during meeting of shareholders that new shares needed to be offered to all members on a pro rata basis, is required to do so irrespective of the fact that, during such meeting, some members had declared not to subscribe.

  b.   The statutory meaning of ‘offer’ within Section 57B of the Companies Ordinance (Cap. 32).”

7.  As this court stated in § 22 of the reasons for judgment, compliance with section 57B was integral to the validity of the November Allotment.  In other words, the November Allotment could not have been held to be valid had section 57B not been complied with, shareholder approval to the November Allotment being a matter the recorder had specifically addressed.

8.  In those circumstances, I fail to see how the questions posed can arise.  The questions are entirely hypothetical given the judge’s finding of shareholder approval to the November Allotment.

9.  For those reasons, leave was refused.

Hon Hartmann JA:

10.  I agree.

Hon Burrell J:

11.  I agree.