TSE TZE HIM KEN v. HO CHI FUNG RONSON AND OTHERS

HCMP 471/2019

[2021] HKCFI 3742

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 471 OF 2019

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D E C I S I O N

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1.  On 29 March 2019 the Petitioner presented an unfair prejudice petition seeking, amongst other relief, an order that the 1^st and/or 2^nd Respondents buy his shares in the Company.

2.  On the same day the Petitioner issued a summons seeking an injunction against the 1^st and 2^nd Respondents.  On 4 April 2019 DHCJ Ismail granted an injunction restraining the 1^st and 2^nd Respondents from certain conduct including dissipation of the Company’s (3^rd Respondent) bank balance.  On 15 April 2021 the 1^st and 2^nd Respondents issued a summons to vary the order granted by DHCJ Ismail.  The application was heard before DHCJ Blair on 18 April 2019 along with a summons issued on 17 April 2019 by the Petitioner pursuant to section 740 of the Companies Ordinance, Cap 622, (“section 740 summons”) seeking the following orders:

“1. The 3^rd Respondent (the ‘Company’), acting by the 1^st and/or 2^nd Respondent, do within 14 days hereof (including the intervening public holiday) serve on the Petitioner an affirmation verifying a list of the records of the Company which fall into the following categories:

(1) The audited financial statement(s) of the Company from incorporation to 31 March 2019 within 14 days from the date hereof;

(2) the bank statements of the Company’s HSBC account (account no. 747-039386-838) from the date of its opening to present date within 14 days hereof and subsequently on a monthly basis;

(3) The management accounts of the Company from incorporation to date within 14 days hereof and subsequently on a monthly basis;

(4) The sales reports of the Company from incorporation to date within 14 days hereof and subsequently on a monthly basis;

(5) A copy of the lease signed between the 2^nd Respondent and Lee Kwai Fong (aka Leung Lee Kwai Fong), Leung Wai Yin Wayne and Leung Wai Tak David (collectively, the ‘Landlord’) signed in or around March 2019.

2.   The Petitioner shall within 21 days of service of the list of records referred to in paragraph 1 above serve on the 1^st and/or 2^nd Respondent a notice stating the records which he would like to have copies of (the ‘Notice’).”

3.  DHCJ Blair made the variation sought to the injunction order and adjourned the Petitioner’s summons for provision of documents pursuant to section 740 for argument.  A date was fixed on 12 July 2021 for the matter to come on before me today, 10 December 2021, some two years and eight months after the summons was issued.  The Petition has never come on before a judge as it should have had in order that directions could be made for the progress of the Petition. It would appear from the court file that all that has happened is that Masters have been routinely extending time by consent for the Parties to file evidence in respect of the Petitioner’s section 740 summons.  I would note that the Petitioner had given an undertaking to DHCJ Ismail to fix within seven days the first hearing of the Petition.  It is in breach of that undertaking. I am told that the delay in the proceedings results from the Parties carrying on negotiations to resolve their differences.  Be that as it may it seems to me that this Petition and the section 740 summons have not progressed satisfactorily.  If it had the documents sought would have been disclosed by now, because I would have thought that if there was justification for ordering inspection of the documents immediately following the presentation of the Petition, necessarily they would be sufficiently relevant to the issues in the Petition to be discoverable.  A cursory read of the Petitioner’s evidence demonstrates this to be the case.  The Petitioner seeks the documents in order to allow him to calculate the value of his shares and also to allow him “to monitor the past and future cash flow”[1] of the Company.  The Petitioner has never been a director of the Company.  As I have mentioned the principal relief that the Petitioner seeks is a buy-out order.

4.  It seems to me quite clear that we are way past the point at which an application for inspection of documents pursuant to section 740 is appropriate.  I will dismiss the application and order that the Petitioner pays the 1^st and 2^nd Respondents’ costs.  I will now hear counsel on directions for the proper progress of the Petition itself.