OCEAN COUNTRY LTD v. WEALTHY VANTAGE LTD AND ANOTHER

HCMP438/2013 & HCMP439/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 438 OF 2013

------------------------------

-------------------------------------------------------

R E A S O N S   F O R   D E C I S I O N

-------------------------------------------------------

1.  These were applications by Ocean Country Limited and Oswego Agents Limited (“Ocean Country” and “Oswego”) under section 168BC of the Companies Ordinance to conduct the defence on behalf of Wealthy Vantage Limited and Golden Field Holdings Limited (“Wealthy Vantage” and “Golden Field”) respectively in HCA85/2013.

2.  The applications first came before Deputy High Court Judge Le Pichon on 19 March 2013 when she gave leave to Uprise Finance Limited (“Uprise”) to oppose the applications.  On 24 May 2013, she referred the applications together with HCA85/2013 and HCA1465/2012 to me as the Civil Listing Judge for directions.  On 24 September 2013, I directed that the two applications be adjourned for argument.  On 7 November 2013, after hearing senior counsel for the parties, I refused the applications. I had indicated that I would hand down the reasons for my decision, which I now do.

BACKGROUND

3.  Mr Tang Shing Bor (“Mr Tang”) and Mr Kwan Kwok Ki (“Mr Kwan”) are each 50% beneficial owner of Wealthy Vantage and Golden Field, two joint venture companies.  Their respective 50% interest in the two joint venture companies is held through Uprise for Mr Tang and through Ocean Country and Oswego for Mr Kwan.

4.  Mr Tang owns and controls another company Kaiser 2000 Limited (“Kaiser”).  Kaiser holds the whole of the 25 storeyed building at Nos 297-305 Jaffe Road, Hong Kong (“the Building”).

5.  It is Mr Tang’s and Kaiser’s case that the Building had been let to Wealthy Vantage and Golden Field to carry out various entertainment businesses under two tenancy agreements both dated 12 December 2003 for a period of 9 years.  The tenancy agreement in favour of Wealthy Vantage covered 2/F, 3/F and 6/F to 10/F of the Building at a monthly rental of HK$368,030.  The tenancy agreement in favour of Golden Field covered other floors of the Building at a monthly rental of HK$1,029,970.  The monthly rentals under the two tenancy agreements were by consent varied twice. The latest variation took place in about mid-2008 whereby the total rental payable by Wealthy Vantage and Golden Field was reduced to HK$440,000 as from May 2008 until the expiration of the tenancies on 31 December 2012.

6.  On 5 June 2012, Kaiser gave notices to quit to Wealthy Vantage and Golden Field.

7.  On 17 August 2012, Mr Kwan commenced HCA1465/2012 against Mr Tang and Kaiser.  It is sufficient for present purposes to note that Mr Kwan pleaded that there was an oral joint venture agreement between him and Mr Tang.  Pursuant to the joint venture agreement, Kaiser had granted to Mr Kwan a licence to use and occupy the Building at a monthly licence fee of HK$440,000.  Mr Kwan had and has been in possession of the Building and to that end has permitted Wealthy Vantage and Golden Field to use and occupy the Building.

8.  It is Mr Tang’s and Kaiser’s case that after the expiry of the tenancies by effluxion of time on 31 December 2012, Wealthy Vantage and Golden Filed have wrongfully remained in possession of the Building and have become trespassers.  On 15 January 2013, Kaiser commenced HCA85/2013 against Wealthy Vantage, Golden Field and Mr Kwan for possession of the Building.  The claims against Wealthy Vantage and Golden Field are based on the expiration of the two tenancy agreements.  The claim against Mr Kwan is that he is the owner and controller of Wealthy Vantage and Golden Field at all material times.  He has commenced HCA1465/2012 against Mr Tang and Kaiser alleging the oral joint venture agreement and the purported licence Kaiser granted to Mr Kwan.  Mr Kwan is therefore liable for trespass either by himself and/or by causing Wealthy Vantage and Golden Field to remain in possession of the Building. Kaiser claims against Wealthy Vantage, Golden Field and Mr Kwan vacant possession of the Building and mesne profit from 1 January 2013 until delivery up of possession or alternatively damages for trespass.

9.  As noted, Ocean Country and Oswego applied in HCMP438/2013 and HCMP439/2013 for leave under section 168BC of the Companies Ordinance to conduct the defence on behalf of Wealthy Vantage and Golden Field in HCA85/2013.

DISCUSSION

10.  Section 168BC provides :

“(1) A member of a specified corporation may, with the leave of the court granted under subsection (3)—

(a) …

(b) intervene in any proceedings before the court to which the specified corporation is a party for the purposes of continuing, discontinuing or defending those proceedings on behalf of the specified corporation.

(2) …

(3) The court may, on the application of a member of a specified corporation, grant leave for the purpose of subsection (1) if the court is satisfied that—

(a) it appears to be prima facie in the interest of the specified corporation that leave be granted to the applicant;

(b) if the applicant is applying for leave to bring proceedings under subsection (1)(a), there is a serious question to be tried and the specified corporation has not itself brought the proceedings;

(c) if the applicant is applying for leave to intervene in proceedings under subsection (1)(b), the specified corporation has not diligently continued, discontinued or defended those proceedings; …”

11.  In my view, it is plainly not in the interest of Wealthy Vantage and Golden Field that leave be granted to Ocean Country and Oswego to conduct the defence on their behalf of HCA85/2013.  The simple reason is that their defence will be just the same as Mr Tang’s, namely, they are entitled to remain in possession of the Building pursuant to the licence granted to them by Mr Tang who in turn obtained the licence to occupy the Property from Kaiser.  They do not derive their right to occupy the Building from other bases.  Mr Wong, SC, argued that Wealthy Vantage and Golden Field are now facing enormous claims for mesne profit and damages for trespass.  That may well be the case but so is Mr Kwan.  I think their interest in defending the action on both liability and quantum will be protected by and through Mr Kwan without the need to incur legal costs.

12.  Further, Wealthy Vantage and Golden Field will not suffer any real prejudice even if the present applications fail, which means that effectively, they will not take part in the action.  For Kaiser has undertaken not to enter any judgment against Wealthy Vantage and Golden Field in default of any defence by them until the conclusion of the trial of HCA1465/2012 and HCA85/2013 or until follow order.

CONCLUSION

13.  For the above reasons, I refused the applications.