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HCMP 505/2006
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO. 505 OF 2006
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IN THE MATTER of LUCKY MONEY LIMITED, LUCKY EMOTION LIMITED, and LUCKY EXTEND LIMITED |
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and |
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IN THE MATTER of the Companies Ordinance, Cap. 32 |
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Before: Hon Kwan J in Chambers
Date of Hearing: 17 August 2007
Date of Decision: 17 August 2007
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D E C I S I O N
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1. On 18 July 2006, I made an order in these proceedings on the application of Kwong Ian (Hong Kong) Construction and Real Estate Development Company Limited (“Kwong Ian”). The relevant parts of that order provided as follows:
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(1) |
the Applicant be entitled to intervene in HCA 447 of 2006 before the Court between Tianjin Jinfu Expressway Co. Ltd [“Jinfu”] on the one part and the Respondents herein [I will call them “the Lucky Companies”] on the other (“the Action”) for the purposes of continuing and defending the Action for and on behalf of the Respondents, pursuant to s. 168BC of the Companies Ordinance; |
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(2) |
the Applicant be entitled to conduct the defence of the Action in the names of the Respondents and do all such things and matters for and on behalf of the Respondents in connection with and ancillary to their defence of the Action;. … |
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(4) |
the Applicant be given liberty to apply to the Court for such further orders or directions as may be appropriate or necessary.” |
2. The wording of paragraph (1) of the order tracks the wording in section 168BC(1)(b). I will come back to the provision in this sub-section.
3. Jinfu applied for summary judgment in the Action on 26 June 2006. Kwong Ian resisted that application on behalf of the Lucky Companies. On 30 July 2007, Waung J gave judgment in favour of Jinfu against the Lucky Companies as claimed, in the sum of RMB176 million odd with interest. He ordered Kwong Ian to bear the costs of the whole action.
4. Kwong Ian intends to appeal against the judgment. It seeks a direction from this court that the leave granted on 18 July 2006 covers the intended appeal to the Court of Appeal and subsequent appeal, if any, until the final determination of the Action.
5. I understand the deadline to file a Notice of Appeal is 21 August 2007.
6. Mr Peter Ng, SC submitted on behalf of Kwong Ian that conducting the defence of the Action would necessarily include exercising the defendants’ right of appeal from the summary judgment against the defendants in the Action. He further submitted that the nature of the leave granted under section 168BC is final and not interlocutory, so the party that has been given leave is to have the carriage of the proceedings until its final determination.
7. I would approach the matter rather differently.
8. Section 168BC(1) reads as follows:
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(1) |
A member of a specified corporation may, with the leave of the court granted under subsection (3) – |
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(a) |
bring proceedings before the court on behalf of the specified corporation; or |
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(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.” |
9. On the face of it, no mention is made of any appeal in this provision, whether in giving leave to bring proceedings under (a), or in giving leave to intervene in proceedings for the purpose of continuing, discontinuing or defending proceedings under (b).
10. Does the court have jurisdiction under section 168BC(1) to give leave to an applicant under (a) or (b) to bring an appeal on behalf of the company? I am inclined to think the answer is yes. The wording in section 168BC(1)(a) and (b) would seem to me to be wide enough to include an appeal in the proceedings before the court.
11. That, however, is not the end of the matter. The situation today is very different from the position when the application came before me last year. Even though leave to intervene in the proceedings would be wide enough to include an appeal, that matter was not canvassed when I gave leave to Kwong Ian to defend the Action. I consider I have a duty to look at the matter afresh, when Kwong Ian made the present application for directions that leave given under the order would cover its intended appeal, under the provision of liberty to apply in paragraph (4) of the order.
12. The Lucky Companies are not before the court today but they have instructed solicitors to write to the court stating that they hold a neutral view on Kwong Ian’s application. This is also the position adopted by two of the directors of the Lucky Companies, Ho Kai Cheong and Cheung Mui Seung Emily.
13. As for the majority shareholder Golden Tree Investments Limited, it has appeared by counsel and informed the court that it is not in a position to form any view on the merits of the intended appeal, because it has only seen the judgment of Waung J but not the affirmations filed in the Order 14 proceedings. I am not prepared to adjourn this application for the majority shareholder to consider the merits of the appeal.
14. I would need to consider two matters.
15. Firstly, Kwong Ian must satisfy the court it appears prima facie in the interest of the Lucky Companies that it should be allowed to bring the intended appeal. It cannot be prima facie in the interest of the companies to bring a hopeless appeal. This is a low threshold by the approach I adopted in my decision on 18 July 2006, see paragraphs 40 to 42. I have read the two judgments of Waung J on 30 July 2007, and noted his views that the evidence against the Lucky Companies is overwhelming. I have also read the draft notice of appeal settled by leading counsel. I do not think the appeal could be characterised as plainly unarguable or as bound to fail.
16. Secondly, I must see to it that the Lucky Companies should not suffer any prejudice if the appeal brought by Kwong Ian should fail. The Lucky Companies are plainly unable to satisfy the judgment sum of RMB176 million, as they are not even in a position to meet any payment as to costs, judging from the audited financial statements as at December 2004 (see paragraph 51 of my decision on 18 July 2006). Jinfu has obtained a costs order from Waung J against Kwong Ian of the whole action, and Jinfu may well look to Kwong Ian again for its costs if the appeal is dismissed. The companies would not suffer any prejudice in the event of an adverse costs order and counsel for the majority shareholder is not able to tell the court of any other prejudice that might be suffered by the Lucky Companies if the appeal should be dismissed.
17. I will make a direction in these terms: the leave granted on 18 July 2006 is to cover the intended appeal against the judgment of Waung J to the Court of Appeal.
18. I will reserve the costs of today’s application.
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(S Kwan)
Judge of the Court of First Instance
High Court |
Mr Peter Ng, SC & Mr Bernard Mak, instructed by Messrs Gallant Y T Ho for the Applicant
Miss Rachel Lam, instructed by Messrs Chan & Yau, for Golden Tree Investments Limited, a shareholder of the Respondents
Mr Y Chan of Messrs David Y Y Fung & Co., for Ho Kai Cheong & Cheung Mui Seung Emily, directors of the Respondents
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