CHAN TING FO v. WONG TSZ HONG AND OTHERS

HCMP 2096/2023

[2023] HKCFI 3211

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2096 OF 2023

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REASONS FOR DECISION

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Introduction

1.  By an Originating Summons dated 10 November 2023 (“the OS”) P seeks an order to remove an unauthorised form for resignation of P as director (“the Impugned Document”) from the Companies Register by the 3^rd Defendant, i.e. the Registrar of Companies (“the CR”).

2.  P is the sole director of the 2^nd Defendant (“the Company”).

3.  The OS is supported by P’s affirmation of 10 November 2023 (“P’s affirmation”).  P explains that:

a.  1^st Defendant (“D1”) filed the Impugned Document.  D1 also submitted other documents to the CR which are still unregistered, and are not the subject of this application.  The overall effect of the Impugned Document and the unregistered documents is for D1 to replace P as the sole director, to appoint a Ms. Fung as the company secretary, and to file a false annual return.

b.  The Impugned Document was filed fraudulently because D1 has no relationship with P or the Company at all;

c.  Although the Impugned Document apparently bears P’s signature, that signature is forged.

d.  P has lodged a new form with the CR to show that he is the director, which was registered on 13 October 2023 (“New Form”).

e.  The continued existence of the Impugned Document on the Companies register is causing business and banking difficulties.

4.  D1 has been served with the OS and P’s Affirmation at the address provided for him in the false annual return which is one of the unregistered documents.  P states that the address given is actually the Company’s first registered address, but that is the last known address for D1.  Indeed as P’s solicitors confirm, it is the only address known for D1.  D1 has not acknowledged service or responded and did not attend the hearing.

5.  The Company is joined per the guidance in Chan Pui Sze v Perfect Star Credit Limited and Others[2021] HKCFI 674 at para. 2.

6.  The CR has provided a statement pursuant to s.43(2) of the Companies Ordinance (Cap. 622) (“CO”)  (“the CR’s Statement”), which forms part of the evidence pursuant to s.43(3) of the CO.  The contents of the CR’s Statement are consistent with P’s evidence.  I note that the CR also attempted contacting D1 and the proposed new company secretary Ms Fung at the addresses provided in the unregistered documents, but received no answer.  The CR takes a neutral stance in this application and was excused from attending the hearing.

Legal Principles

7.  Section 42 of the CO provides, so far as material:

(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

(ii)  has been done without the company’s authority; 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.

(5)  If the Court makes an order for the rectification of any information on or the removal of any information from the Companies Register under subsection (1), the Court may make any consequential order that appears to it to be just with respect to the legal effect (if any) to be accorded to the information by virtue of its having appeared on the Companies Register.

…”

8.  The principles governing Section 42(1) and (4) of CO have been summarised by Linda Chan J in Wang Zhihua v Regsitrar of Companies [2020] HKCFI 2873 at para. 22:

“(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 rectification or removal ought to be apparent from an inspection of the record.”

9.  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 para. 16.

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

“Given the fact that it would appear the 1^st 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.”

Whether to make an order

11.  I am satisfied that the information on the Companies Register as to the resignation of P as a director derives from the Impugned Document which is factually inaccurate, was forged and was done without the Company’s authority.

12.  I hold that the purported resignation of P as a director pursuant to the Impugned Document is null, void and of no legal effect.

13.  Accordingly, the information should be removed or rectified.

14.  I am satisfied that the Impugned Document should be removed from the Companies Register on the basis of P’s evidence that:

a.  The Company lost a business opportunity because the Government could not accept P’s signature on the tender documents submitted in April 2023;

b.  P has been informed by the Company’s bank ORIX Asia Limited that the Company’s application for loans would not be able to proceed if the Impugned Document was still shown on the Companies Register;

c.  D1 has no past or present relationship with the Company and/or P at all so:

a.  there is no good reason for the information to remain  on the register where it may cause confusion;

b.  D1 cannot suffer any prejudice in the removal of the Impugned Document.

Form of Order and Costs

15.  P seeks and I am willing to make an order to the effect that:

a.  The Impugned Document be declared null, void and of no legal effect; and

b.  The Impugned Document be removed from the Companies Register.

16.  I agree with the CR’s proposal that there also be an order that the New Form be removed from the Companies Register, in order to avoid confusion.

17.  As to costs, I summarily assess P’s costs at HK$45,000 and order that they be paid by D1 forthwith.

18.  I make an order in the terms of the draft provided to the court subject to the addition of the order proposed by the CR as set out at para. 16 above.