L v. X LTD

HCMP 1002/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1002 OF 2017

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D E C I S I O N

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1. I have before me an originating summons for leave to issue a statutory derivative action against the respondent. There is also a summons dated 25 May 2017 issued by the respondent.

2. The respondent Company is a charity incorporated by guarantee.  The claims which the applicant wishes to pursue on behalf of the Company will shortly become time-barred.  The precise nature of those claims do not matter for present purposes.

3. The Company raises by its summons a point of principle.  This can be explained most readily by quoting the question of law that the summons seeks to have determined:

“Whether in light of the undisputed or indisputable fact that the Respondent is a company not of a private nature with shareholders but a charitable company incorporated by guarantee whose members have no right to any of its surplus assets upon its dissolution and whose affairs are subject to supervision by the courts at the instance of the Secretary for Justice, the Applicant has any legitimate or sufficient interest to invoke sections 732(1) and 733 of the Companies Ordinance (Cap. 622) to bring proceedings on behalf of the Respondent?”

4. It is not practical for that issue or for the other matters which the originating summons requires to be determined to be resolved today.  The parties have agreed that the timing problem, by which I mean the fact that it will not be possible to determine the originating summons and the inter-parte summons before it is suggested the limitation period will expire, should be addressed by an order granting leave to issue the writ without determining the originating summons against an undertaking by the applicant to withdraw the writ which will not be served in the event that the respondent is successful either on its inter‑parte summons or in defeating the originating summons on some other ground.

5. Because there is some confidentiality in this matter the names of the parties will be redacted but as this is an issue which is likely to arise in the future, I think it helpful that the form of order that has been made is made available to practitioners and it is appended to these short reasons.

Order

Upon the Plaintiff by counsel undertaking:

(a)  not to serve any writ issued pursuant to paragraph 1 of the summons without leave of the court; and

(b)  to withdraw any writ issued pursuant to paragraph 1 of the summons if an order is not granted on the hearing of the originating summons dated [  ] giving the Plaintiff leave to commence a statutory derivative action substantially in the form sought in the originating summons against the Respondents

1.  Leave be granted for the Plaintiff to issue a writ endorsed with a statement of claim substantially in the form of the draft appended to this Order on behalf of the Respondent against the following persons:

  1. ⋯

  2. ⋯

  ⋮

  19. ⋯

2.  The writ of summons be placed in a sealed envelope and not available for inspection by the public and the names of the parties in the writ of summons not be entered into the cause book or published by the Court Registry without the leave of the court.

3.  The originating summons dated [   ] be adjourned for argument with 1 day reserved in consultation with counsel’s diaries.

4.  The Applicant has leave to file evidence in reply within 28 days.

5.  Normal directions for submissions and hearing bundles.

6.  Costs be reserved.