CNT RESOURCES LTD AND ANOTHER v. LAM BILL AND OTHERS

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FURTHER RULING

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1. Having made the Order which I did in my Ruling on 30th July 1985 on an inter partes Summons in this action I have been called upon by the Plaintiffs for an extension of the time of the continuing injunction granted to them in that Ruling, such continuing injunction having expired at 4.30 p.m. last Thursday, 1st August 1985.

2. This application for an extension of time is by way of an ex parte application on notice. The 1st, 2nd, 4th, 6th and 7th Defendants were as the result of the notice represented by Counsel. The Solicitors for the 5th Defendant had been notified but did not put in an appearance, and the 3rd Defendant who I was told, was unrepresented had been personally notified and also did not put in an appearance.

3. Ching, for the Plaintiffs, very frankly outlined the circumstances which had caused the Plaintiffs to miss the deadline given to them by my earlier Ruling, and adduced arguments to show that such Grounds of Appeal as were likely to be put before the Court of Appeal against my interlocutory Ruling were of substance or, if put the other way round, were not in any way frivolous.

4. The explanation for missing the deadline and the likely arguments to be adduced on appeal were linked in the following manner. Counsel acting for the Plaintiffs last week took the view that the chances of overturning the Ruling were unlikely to be successful but that, explained Ching, was because he had not put his case on the correct footing. He had, so it was urged upon me, wrongly attempted to argue the case as being a derivative action, whereas the more correct basis for putting the plaintiffs' case was that, at least so far as the 2nd Plaintiff was concerned, the action should have been looked upon as an action brought in a representative capacity. In that light both in form and procedure it was correctly brought.

5. In support of these arguments my attention was directed to Gower's Principles of Modern Company Law, whence passages from page 653 through to page 656 were read out to me, and the base of Edwards and Another v. Halliwell and Others ⁽¹⁾ was cited with the headnote being read out supplemented by short passages from the judgment of Jenkins L.J.

6. On the question of differing viewpoints I should note that Yu for the 1st, 2nd, 4th, 6th and 7th Defendants, whilst conceding that neither the passage from Gower nor the Edwards v. Halliwell Case were cited, claimed that the citations from Palmer on Company Law more than adequately covered the point in issue. It would be quite wrong for me at this stage to attempt to resolve these conflicting arguments except to say that I do not find the arguments advanced for the Plaintiffs so overwhelmingly convincing that I would be tempted metaphorically to throw up my hands and to say of course I was wrong in my Ruling last week. Suffice it for me to agree that the arguments have substance and leave it at that.

7. The explanation for the Plaintiffs as to why it has taken so long for these arguments to surface is as follows. Upon receiving the dispiriting advice of their Counsel last week, Solicitors for the Plaintiff sought the advice of leading Counsel in London, and on the basis of the facts given to him he ventured an opinion favourable to appealing my Ruling and his view in turn found favour with Ching who was first briefed on this matter on Saturday.

8. Nevertheless, Yu argued, this was simply a case of the Plaintiffs trying to have an extension of an extension which had already lapsed, and no such indulgence should be granted. He supported his opposition to the application for extension on a further ground. The extension given in my Ruling last week was part of my Order and the Order had already been perfected and entered. Therefore there was no jurisdiction to alter or vary it. In support of this contention he drew my attention to Halsbury's Laws of England Vol. 26 at paragraphs 555 and 556. He further drew my attention to R.S.C. Note 20/11/8 sub-paragraph (7) and argued that what was now sought was not a procedural matter and therefore could not now be amended.

9. In reply I was urged to look upon this application for extension of time as just that, a procedural application and one well within the provisions of R.S.C. Order 3 rule 5(1) and the last sentence of Note 3/5/5 was also drawn to my attention.

10. Another provision of the Rules of the Supreme Court was cited to show me why the present course was the only correct one for the Plaintiffs to take under the circumstances - R.S.C. Order 59 rule 14(4). By analogy with the provisions of R.S.C. Note 59/13/1 giving discretion under certain circumstances for a stay of judgment it was argued a fortiori, as it were, the Court ought to have discretion to enlarge time which was all that was being sought in this. present application.

11. This application was before me for an injunction to be continued until the hearing of the Appeal. In view of the basis of my ruling, namely that neither Plaintiff had any locus standi and therefore no business at all in attempting to interfere in the internal affairs of the 7th Defendant Company, I felt that in any event I could not grant the application in those terms. I was of the view that at least the arguability of the Plaintiffs' case against my Ruling ought to be ventilated before the Court of Appeal if any further extension at all were to be granted.

12. Despite the strong effect that the Defendants' argument had on me on the point that the Plaintiffs were simply trying to obtain an extension of an extension which had already lapsed, I felt that to preserve against a possible error, which in the circumstances if the Directors resolution of 22nd July were to be implemented, would be well-nigh irreparable, it was right, if I had such a right, to live such further extension as would allow the Court of Appeal to decide on what I light refer to is the strength of the arguability of the case. Further consideration persuaded me that I did have the necessary discretion to give the Plaintiffs the further extension of time.

13. My decision therefore comes to be as follows. In order further to preserve possible options open to the Plaintiff on any appeal, and in order for them to seek leave for any further extension that may seem right and proper to the Court of Appeal I order that those injunctions obtained on an ex parte basis on 23rd July 1985 and as amended on 24th July 1985 continue in force until 4.30 p.m. on Wednesday, 7th August.

14. I give liberty to apply for extension and I order that costs be to the 1st, 2nd, 4th, 6th and 7th Defendants in any event. On the order of costs I would observe that if this part of my Order be reversed it was in my view a case suitable for 2 Counsel.

(1) [1950] 2 A.E.R. 1064