NG YIU CHI ELEANOR v. REGISTRAR OF COMPANIES AND ANOTHER

CACV 117/2024, [2025] HKCA 610

On Appeal From [2024] HKCFI 654

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 117 OF 2024

(ON APPEAL FROM HCMP NO 1248 OF 2023)

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BETWEEN

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JUDGMENT

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DHCJ Reyes SC (giving the judgment of the Court):

I. INTRODUCTION

1.  The Plaintiff (Ms Eleanor Ng) seeks an order that the Form IB filed by Hultucktong Enterprises Ltd (HEL) with the Companies Registry be removed pursuant to Companies Ordinance (Cap 622) (CO) section 42.

2.  Form IB contains information about a company’s share allotments. HEL’s Form IB states that 100 shares have been allotted and HK$100 has been paid for each HEL share so allotted. Ms Ng says that the information is wrong. This is because (Ms Ng asserts) 99 HEL shares were allotted to Confederated Assets Group Limited (CAGL) and 1 HEL share was allotted to Well Arts Enterprises Limited (WAEL) without any money having been paid by either company for the shares.

3.  Ms Ng observes that article 3 of HEL’s Articles of Association stipulates: “All shares must be fully paid up when allotted...” She complains that HEL’s Form IB must therefore be misleading to the public and should be removed by the court in the exercise of its power under CO section 42. That section states:

“(1) The Court may, on application by any person, by order direct the Registrar to rectify any information on the Companies Register or to remove any information from it if the Court is satisfied that—

(a) the information derives from anything that—

(i) is invalid or ineffective; or

(b) the information—

(i) is factually inaccurate; or

(ii) derives from anything that is factually inaccurate or forged.

....

(4) The Court must not order the removal of any information from the Companies Register under subsection (1) unless it is satisfied that—

(a) even if a document showing the rectification in question is registered, the continuing presence of the information on the Companies Register will cause material damage to the company; and

(b) the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register.”

4.  WAEL holds its one allotted HEL share on trust for CAGL. Accordingly, in the rest of this Judgment, we will proceed on the basis that the 100 HEL shares were allotted to CAGL.

5.  Anthony Chan J struck out Ms Ng’s application at first instance. He did so for three reasons. First, he regarded Ms Ng’s application as an abuse of process. He believed that Ms Ng could have raised (but did not raise) her present complaint in High Court Action No 51 of 2007 and Nos 1040 & 1041 of 2009 (the Consolidated Actions). Those proceedings were heard together between January and October 2015 and resulted in a judgment by Mimmie Chan J on 6 January 2016. In the circumstances, Anthony Chan J thought that Ms Ng was estopped from bringing her present complaint by the principle in Henderson v Henderson (1843) 3 Hare 100, 67 ER 313. Second, the judge noted that any cause of action by HEL to claim the HK$10,000 due on the allotment of HEL shares has long since been time-barred. Third, the judge held that Ms Ng lacked a legitimate interest or locus to invoke CO s.42 to have HEL’s Form IB removed.

6.  Ms Ng appeals before this court against Anthony Chan J’s judgment. She does so on three grounds which mirror the judge’s reasons. She submits that Henderson v Henderson does not apply to her situation. She denies that there is any operative time bar. She claims a legitimate interest and standing to invoke CO section 42.

II. BACKGROUND

7.  Ng Po Sum (the Father) and To Pui Kui (the Mother) had 8 children: (1) Philip Ng Kwok Piu (the eldest), (2) Ms Ng, (3) Angela Ng Kay Chee, (4) Olympia Ng Woon Chi, (5) Tony Ng Kwok Tung, (6) Jeremy Ng Kwok Ching, (7) Stephanie Ng Oi Che, and (8) Andrew Ng Kwok Tai. The Father set up a string of family companies, including HEL, Hultucktong Company Limited (HCL), Hultucktong Commercial & Industrial Co Ltd (HCIL) and Ng Sheung Ming Association Ltd (NSMAL). The companies held properties which the Father had purchased over the years. In 1997, shortly before his death, the Father undertook a restructuring of the family companies in a bid to minimise estate duty. Until then shares in HCL, HEL, and HCIL were in the names of NSMAL, the Father, the Mother, Philip, Ms Ng, Stephanie, Andrew, and (in respect of HCL) Angela and Olympia. HEL owned the bulk of the family’s properties.

8.  As the initial step in the 1997 restructuring, the Father set up CAGL (a BVI company). HEL, HCL and HCIL then each issued 100 ordinary shares to CAGL. Thereafter, shares held by Ng family members in various family companies were converted into deferred shares. The deferred shares were transferred to CAGL. In return, Ng family members received shares in CAGL. As the final step in the restructuring, the Father transferred his twenty CAGL shares to his children.

9.  From 2004 onwards, following the Father’s passing in 2002, disputes arose between two factions of the Ng family in relation to the validity of the restructuring. On one side were the Mother, Ms Ng, Angela and Andrew (collectively, the Mother group). On the other side were Philip, Olympia, Tony and Stephanie (collectively, the Philip group). In High Court Action No 523 of 2008, the Mother alleged that the Father’s signatures on restructuring documents pertaining to the allotment of HCL, HEL and HCIL shares to CAGL and the transfer of the Father’s shares in CAGL to his children were forged. The Mother’s contentions were dismissed on appeal. In the Consolidated Actions, the Mother group claimed that signatures on various restructuring documents were forged. They denied that a restructuring had taken place in 1997.

10.  Following a 26-day trial, Mimmie Chan J found on 6 January 2016 against the Mother group’s contentions in the Consolidated Actions. In August 2020, the Court of Appeal (Civil Appeal Nos. 21 & 24 to 29 of 2016 and Civil Appeal Miscellaneous Proceedings No. 6 of 2019 (Poon CJHC, Yuen and Chu JJA)) dismissed appeals by the Mother group against Mimmie Chan J’s judgment. In its judgment, the Court of Appeal (at [13]) identified the “primary issue” between the parties as being “whether in a restructuring exercise in 1997, the shares in these companies had been validly divested from family members in favour of [CAGL] in which family members had been allotted shares”.

11.  In the Consolidated Actions, the Combined Defence of the Mother group pleaded in its paragraph 35(1)(iii) that members of the Mother Group received no consideration from CAGL for the disposal of their HEL shares. Paragraphs 35(2)(iii) and 35(3)(iv) made similar pleadings in relation to HCIL and HCL. Further, during the first instance hearing of the Consolidated Actions, Andrew sought to challenge the authenticity of contemporaneous documents filed at the Companies Registry. On appeal, Andrew abandoned the suggestion that restructuring documents bearing Companies Registry chops had not been filed on their stated dates. In the end, the Court of Appeal concluded (at [22.5]) that “after May 1997, the Father as director of HEL, HCL and HCIL and as authorised signatory of CAGL had conducted these companies on the basis that there had been a valid restructuring exercise” The Court of Appeal (at [25]) affirmed Mimmie Chan J’s findings that, until the time of his death, the Father had been “fully hands on” in relation to the operation and use of the companies and “had signed documents reflecting the validity of the restructuring documents”.

12.  The Form IB in this case was received by the Companies Registry on 13 May 1997. It was signed by Stephanie, in her capacity as an HEL director, on 5 May 1997.

III. DISCUSSION

A. Ground 1 – Henderson v Henderson estoppel

A.1 The principle

13.  It is an abuse of process to litigate matters that could and should have been litigated in previous proceedings. In Henderson v Henderson (at 115) Wigram VC summarised the principle which takes its name from the case thus:

“[W]here a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

14.  The rationale behind the principle is that, as a matter of public policy, there should be an end to civil disputes. A party should not be vexed more than once by issues which could and should have been raised in previous litigation. A party should not be faced with endless litigation over the same dispute.

15.  It is true that the application of the principle may lead to a party being shut out from bringing a case before the court. Consequently, in Yat Tung Investment Co Ltd v Dao Heng Bank [1975] AC 581 the Privy Council on appeal from the Hong Kong court cautioned (at 590A-E) that the shutting out of a party by reason of the principle was a power which “no court should exercise but after a scrupulous examination of all the circumstances”. In particular, according to the Privy Council, the principle should be “limited to cases where reasonable diligence would have caused a matter to be earlier raised”. Moreover, while “negligence, inadvertence or even accident will not suffice to excuse” the belated raising of a case, there may be “special circumstances" calling for the non-application of the principle in the interests of justice.

A.2 Ms Ng’s position

16.  Mr Eugene Kwan appearing for Ms Ng submits that her application does not constitute Henderson v Henderson abuse.

17.  Mr Kwan stresses that Ms Ng only discovered the possibility of CAGL’s non-payment for HEL’s shares after the trial of the Consolidated Actions. The discovery only came as a result of Philip’s evidence on Day 11 and Tony’s evidence on Day 14 of the trial before Mimmie Chan J. The evidence from the brothers was to the effect that neither received any cash payment for transferring their deferred shares in HEL to CAGL. The brothers’ evidence led Ms Ng to dig further. She asked the Mother and Andrew whether CAGL had paid them for their HEL deferred shares. They replied in the negative. Ms Ng then found out that CAGL had no bank account until July 1998, by which time HEL had allotted shares to CAGL. Based on her researches, Ms Ng concluded that CAGL must not have paid for the 100 shares allotted to CAGL.

18.  Mr Kwan suggests that Ms Ng could not have raised the matter during the appeal from Mimmie Chan J. That is because (according to Mr Kwan) the Consolidated Actions concerned the entirely different issue of whether signatures on the restructuring documents were forgeries. On appeal, Ms Ng would not have been allowed to run a new fact-sensitive point on the correctness of the Form IB.

A.3 Analysis

19.  We disagree.

20.  First, Mr Kwan characterises the scope of the Consolidated Actions too narrowly. The Consolidated Actions did not simply deal with whether certain signatures on particular documents were forged. As the Court of Appeal observed (at [13]), the Consolidated Actions involved a wholesale challenge by the Mother group to the restructuring. The primary issue in the Consolidated Actions was whether, by the restructuring, shares in the companies set up by the Father (including HEL) had been validly divested from Ng family members in CAGL’s favour. The Court of Appeal’s observation is supported (among others) by the pleadings in the Consolidated Actions to the effect that members of the Mother Group received no consideration from CAGL for the disposal of their HEL, HICL and HCL shares. The Court of Appeal’s observation is also supported by Andrew’s wholesale attack on the validity of documents relating to the restructuring filed with the Companies Registry.

21.  The present application by Ms Ng in substance seeks to undermine the validity of the issue of 100 HEL shares to CAGL as a step in the restructuring. The present application is in reality a collateral attack on the court’s finding in the Consolidated Actions that the restructuring was valid. The present application is another salvo in the protracted battle between the Mother and Philip groups over the integrity of the restructuring.

22.  It follows that this application should have been raised by Ms Ng as part of the Consolidated Actions.

23.  Second, the brothers’ evidence which is alleged to have raised Ms Ng’s suspicions was as to the brothers not having received money from CAGL in exchange for their HEL deferred shares. The evidence emerged on Days 11 and 14 of a 26-day trial. The brothers’ evidence was given in response to specific questions on payment put to Philip and Tony in cross-examination. The questions must have been regarded as relevant to the outcome of the Consolidated Actions by the Mother group and its lawyers. Otherwise, it is difficult to see why the questions would have been put in cross-examination at all. Despite this, there was no follow up on the evidence elicited by the cross-examination over the remaining days of the trial.

24.  The 26-days of the trial stretched from 26 January to 30 October 2015 with Days 11 and 14 of the trial falling on 10 and 13 February 2015. No adjournment was sought over that nine-month period to enable the parties to consider the implications of the so-called “new” evidence of Philip and Tony. No application was made in the two or so months between the end of the trial on 30 October 2015 and the delivery of the judgment on 6 January 2016 for leave to adduce new evidence. Instead, nothing appears to have been done by way of investigation or otherwise until some time after the Mother group lost on appeal.

25.  In those premises, it is difficult to see how Ms Ng exercised “reasonable diligence” to raise the matter of the Form IB’s invalidity.

26.  Third, the appeal from Mimmie Chan J was heard on 9 and 10 January 2019, with further written submissions on 28 January 2019. In other words, the appeal was not heard until after nearly three years had elapsed from Mimmie Chan J’s judgment. It is therefore not apparent why Ms Ng could not have raised the matter on appeal.

27.  Mr Kwan submits that, even if the point had been raised on appeal, the Court of Appeal would have rejected it off-hand as a fact-sensitive matter beyond the narrow confines of the Consolidated Actions. However, under the rule in Ladd v Marshall [1954] 1 WLR 1489, new evidence may be raised on appeal if three conditions are met. Those conditions are: (1) the evidence could not have been obtained with reasonable diligence for the first instance hearing, (2) the evidence could have an important bearing on the outcome of the case, and (3) the evidence is credible. If (as Mr Kwan suggests) (a) evidence of the invalidity of HEL’s allotment could not have been adduced at the trial of the Consolidated Actions, (b) Ms Ng’s evidence could have a material bearing on the validity of part of the restructuring, and (c) Ms Ng’s evidence is credible, why was the same not introduced in the nearly three years run-up to the appeal? No explanation has been proffered. This undercuts the suggestion that Ms Ng acted as soon as she could to bring her application.

28.  In our view, not only should Ms Ng have raised her present complaint during the trial or the appeal of the Consolidation Actions, she could also readily have done so. She did not so act and there are no special circumstances to explain her failure. The principle in Henderson v Henderson applies.

29.  The first ground of appeal fails. Ms Ng’s application constitutes an abuse of process under the principle in Henderson v Henderson.

B. Ground 2 – Time bar

30.  Anthony Chan J reasoned, on the premise HEL had not been paid for the allotment to CAGL in 1997, that HEL’s cause of action against CAGL for payment arose in 1997. If so, any claim by HEL for the unpaid HK$10,000 would now be time-barred under the Limitation Ordinance (Cap 347) and HEL would be barred from reclaiming the HEL shares allotted to CAGL in restitution.

31.  Mr Kwan submits that the judge fell into error. The application (Mr Kwan says) is brought pursuant to CO section 42 which has no time limit for applications under it. Whether HEL’s claims against CAGL is time-barred has no bearing on whether Ms Ng can apply for relief under CO section 42. Mr Kwan points out that, in any event, the expiry of a limitation period only bars the obtaining of a remedy, it does not extinguish a party’s right. Even if HEL’s claims against CAGL is time-barred, this would not mean that the share allotment had become valid.

32.  We disagree.

33.  First, article 3 of HEL’s Articles of Association constitute a contract among HEL and its shareholders. Article 3 thus gives HEL (1) a contractual right to insist on CAGL paying any unpaid monies for the 100 HEL shares or (2) a restitutionary right to reclaim the 100 HEL shares for any total failure of consideration. Under the Limitation Ordinance, the time limit for both causes of action (contract and restitution) would be six years. The two causes of action having arisen in 1997, both would now be time-barred. HEL would not be entitled to claim any unpaid money in contract or to claim restitution of the 100 shares. The effect would be that HEL is now barred from denying CAGL’s title to the shares. In those circumstances, it is not apparent how the information on the Form IB can be described as misleading, invalid or ineffective. Due to lapse of time, the HEL shares must now be treated as fully paid up and the information on Form IB regarded as valid and effective.

34.  Second, before ordering the removal of a Form IB under CO section 42, the court must be satisfied that (1) “the continuing presence of the information on the Companies Register will cause material damage to the company” and (2) “the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register”. Since HEL is now barred from denying CAGL’s entitlement to the HEL shares allotted, the continuing presence of the impugned information on Form IB cannot cause “material damage” to HEL. Nor would HEL’s interest (if any) in the removal of the information outweigh any other person’s interest in maintaining the same. On the contrary, HEL being estopped from now denying that the 100 shares have been paid up, the rest of the world has to accept that reality. Removal of the information would be misleading as to the actual position that has been attained.

35.  The second ground of appeal fails.

C. Ground 3 – Legitimate interest and locus

36.  Anthony Chan J doubted that Ms Ng had a legitimate interest or even locus to bring a claim under CO section 42. He pointed out that Ms Ng was a mere shareholder of CAGL and not of HEL. She did not own HEL’s assets. Further, Ms Ng lacked locus, since she was neither a party to the contract of allotment between HEL and CAGL nor a party to the contract between HEL and its members as evidenced by HEL’s Articles of Association.

37.  Mr Kwan argues to the contrary that Ms Ng has locus and a legitimate interest. He says that such standing and interest stem from Ms Ng being a shareholder of CAGL and CAGL being in turn a shareholder of HEL. He argues that the validity of the allotment would affect CAGL’s status and rights as a shareholder of HEL. If the allotment is invalid, CAGL would only hold deferred shares in HEL, not ordinary shares. That (says Mr Kwan) would affect the rights which CAGL can exercise as an HEL shareholder.

38.  Mr Kwan’s point strikes us as contrived. If CAGL’s voting rights in HEL become circumscribed by reason of the Form IB being withdrawn and CAGL’s status within HEL being downgraded to that of a non-voting deferred shareholder, such outcome would plainly be contrary to CAGL’s interest. Mr Kwan is effectively submitting that Ms Ng has locus or an interest as a shareholder of CAGL to mount an application under CO section 42 to produce an outcome which would be detrimental to the interests of CAGL and the body of its shareholders. Ms Ng purports to be entitled to do that without authorisation from CAGL’s board or the majority of its shareholders. Ms Ng’s course of action is obviously contrary to HEL’s wishes as HEL has appeared before Anthony Chan J and this court to oppose Ms Ng’s application. In those circumstances, whatever the threshold might be for someone to qualify as a proper person to bring a CO section 42 application and however low that threshold may be, we do not believe that the threshold has been crossed here.

39.  Mr Kwan observes that the trustee involved in the disposal of family properties has indicated that proceeds will not be released to HEL until its company returns are in order. He notes that HEL’s bank account has been frozen since 2006 and will only be restored after HEL’s company returns have been rectified. According to Mr Kwan, removal of the Form IB will clarify the confusion over the status of HEL shares. However, like Anthony Chan J, we do not see how Mr Kwan’s observations logically lead to a conclusion of Ms Ng having locus to act against CAGL’s interest. Nor, for the reasons articulated in connection with the second ground of appeal, do we see any confusion or misapprehension arising from HEL’s Form IB remaining as it is.

40.  The artificiality of Ms Ng’s application is even starker when viewed in light of CO section 135. The nominal or par value of each HEL share was HK$100 when the 100 shares were issued to CAGL in May 1997. CO section 135 (which came into effect in 2014) provides:

(1) Shares in a company have no nominal value.

(2) This section applies to shares issued before the commencement date of this section as well as shares issued on or after that date.

Thus, since 2014 HEL shares are to be treated by law as having no nominal or par value. In that context, Ms Ng’s application to enforce the par value of the 100 HEL shares issued to CAGL constitutes an academic exercise.

41.  The third ground of appeal fails.

D. Postscript

42.  The discussion in sections III.A, B and C above has assumed, in Ms Ng’s favour, that there is substance in her allegation of an error in HEL’s Form IB. This court should not, however, be taken to have accepted the soundness of that assumption. On the contrary, on the material before this court, Ms Ng’s contention appears tenuous.

43.  First, article 3 of HEL’s Articles of Association stipulates that shares must be “fully paid up” when allotted. Article 3 does not require that allotted shares be “paid up” by cash as opposed to money’s worth. The cross-examination posed to Philip and Tony narrowly focused on whether they had been paid in cash for the transfer of their HEL deferred shares. There was no exploration of whether they were paid in money’s worth.

44.  Much of Ms Ng’s case that HEL was never paid rests on the surmise that, CAGL not having had a Hong Kong bank account until 1998, it could not have “paid” HEL for the 100 allotted shares. The difficulty with the surmise is that, even on the questionable assumption that the lack of a bank account means that CAGL could not have paid HEL in cash, it does not follow that HEL could not have been paid for the allotment to CAGL in money’s equivalent. For example, for what it is worth, Philip has deposed that HEL was paid by setting off a debt due to CAGL from HEL against the HK$10,000 due to HEL from CAGL.

45.  Second, in any event, HEL’s audited accounts for the year ended 31 March 1998 state in the section headed “Balance Sheet” that the 100 shares allotted in 1997 were “fully paid”. The same is recorded in HEL’s audited accounts for the year ended 31 March 2005. Against the certifications of HEL’s auditors, Ms Ng’s surmise should be regarded with scepticism.

IV. CONCLUSION

46.  We dismiss Ms Ng’s appeal as an abuse of process and order that Ms Ng bear the Defendants’ costs on an indemnity basis. The costs will be assessed summarily upon the Defendants lodging their statement of costs within seven days and Ms Ng lodging her objections within seven days thereafter.