LAU CHI YAN ROGER AND OTHERS v. TUNG KA HUNG AND OTHERS

HCCW 1097/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP NO. 1097 OF 2002

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J U D G M E N T

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1. This is the return day of an ex parte order made by Deputy High Court Judge Woolley on 2 October 2002 restraining the 1st and 2nd Respondents, as well as Grand Sky Holdings Limited (the 11th Respondent), from carrying into effect any resolutions made at an extraordinary general meeting of the company held on 2 October 2002, and restraining the 1st and 2nd Respondents from procuring the company to change the present board composition of the 12th Respondent.

2. On 9 October 2002, the 1st Respondent filed and served a very lengthy affirmation comprising bulky exhibits in opposition to the continuation of the injunction. At today's hearing, Ms Liu, appearing for the 1st and 5th Petitioners, asks for directions for the filing of further evidence in reply in support of her clients' application to continue the injunction. She asks that the ex parte injunction be continued in the meantime pending the adjourned hearing of the two Petitioners' summons to continue the injunction. This is opposed by Mr Wong, appearing for the 1st, 2nd and 18th Respondents.

3. Mr Wong essentially argues that the ex parte injunction should be discharged. He points out that the main ground of the application before Deputy High Court Judge Woolley was that the extraordinary general meeting and the notice calling for the holding of the extraordinary general meeting were irregular, as being in contravention of the provisions of Section 113 of the Companies Ordinance, Cap. 32. Mr Wong points out that in fact as is apparent from the notice itself as well as a letter written by those instructing him to the two Petitioners' solicitors on the very day when the two Petitioners went before Deputy High Court Judge Woolley for the ex parte injunction, the EGM was called not pursuant to the provisions in Section 113 but instead those in Section 114A(1)(b), and there was no irregularity whatsoever in relation to the notice so issued and thus the EGM so held. Mr Wong argues that the main plank of the application for the ex parte injunction is gone. Moreover, it is accepted by Ms Liu that the letter of 2 October 2002 was indeed received by the two Petitioners' solicitors whilst they were making their application before the learned judge on 2 October 2002, but the solicitors at that time had some difficulty in truly understanding the meaning and implications of the content of the letter. Mr Wong argues that that notwithstanding, this is also a case of material non-disclosure, in that the two Petitioners' solicitors never informed the learned judge whether at the hearing or after the obtaining of the ex parte injunction about the true basis of the notice in question as well as the EGM. Mr Wong therefore asks me to discharge the ex parte injunction. He adds that if the two Petitioners think that they have a good case for an injunction, they could apply for a fresh one later; that would be another matter.

4. The facts involved in the underlying petition are obviously very complicated. There are serious disputes between the parties involved. This can be easily seen from the very detailed affirmation filed by the 1st Respondent. Ms Liu, very understandably informs me that her clients substantially dispute the content of the 1st Respondent's affirmation and would require an opportunity to put in evidence to demonstrate the falsity of the content of the 1st Respondent's affirmation.

5. So far as the present dispute between the parties before me is concerned, I am clearly of the view that but for the point taken by Mr Wong relating to the discharge of the ex parte injunction on the ground that I have described above, the two Petitioners should be given a chance to respond to the 1st Respondent's affirmation and the injunction should be continued pending the filing of evidence and the substantive hearing of the summons of the two Petitioners.

6. The question for me to decide is whether I should now decide on the point made by Mr Wong and here and now set aside or discharge the ex parte injunction (if I am with Mr Wong), or whether I should leave it to be argued and decided by the judge who eventually hears the summons. In deciding this issue, I bear in mind two matters in particular. Firstly, regarding the true basis of the notice and the EGM, I agree that this was one of the reasons used by the two Petitioners to obtain the ex parte injunction from the learned judge. But as can be clearly seen from the skeleton argument used at the hearing before the learned judge, the application was based also on the alleged agreements between the parties and the need to preserve the status quo pending the resolution of the disputes between the parties. While I would not say that the basis of the notice and the basis of the EGM were not material matters for the court to take into account in deciding whether to grant the ex parte injunction, I am not sure, at this particular stage, whether in the exercise of my discretion, I should base on this ground alone - assuming that there was a material miscomprehension of the situation - discharge the ex parte injunction.

7. As I said, certainly, apart from the true basis of the notice and the EGM, there were and still are pending before the court important matters concerning the disputes between the parties for the court to consider in order to decide whether any interim injunctive relief should be granted or continued.

8. So in short, even assuming that Mr Wong is correct relating to the basis of the notice and the EGM, I am not prepared at this stage, in the exercise of my discretion, to set aside or discharge the ex parte injunction on this ground. That said, I am not saying that this ground would not be sufficient, whether by itself or when taken together with other relevant matters, to entitle the court not to continue the injunction. This is left to the judge who is going to hear the summons of the two Petitioners to continue the injunction to decide. All that I am saying is that at this interim stage, I am not prepared to discharge the injunction on this ground. I should add, whilst I am on this ground, in all fairness to the two Petitioners' solicitors, that in all likelihood, in my judgment, their misapprehension, if any, of the true basis of the notice and the EGM was an innocent mistake on their part. Their failure to comprehend the meaning and implications of the content of the letter of 2 October 2002 whilst they were on the feet before the learned judge is, in my judgment and subject to further evidence to be filed (if any), rather understandable, based on the material that is before me and based on what I have heard thus far. As I say, I am leaving all this to the judge who is going to hear the summons to decide (if necessary).

9. Secondly, I bear in mind whether there is any real prejudice to the clients of Mr Wong if I do not discharge the injunction now on the ground argued by Mr Wong, and leave the matter to the judge hearing the summons to decide. The difference is between discharging the injunction now and discharging the injunction after a full hearing by the judge hearing the summons. One would be talking about a difference of several weeks or a month or so. Mr Wong, despite his able submission, is unable to persuade me that there is any real and substantive prejudice to his clients if I refuse to discharge the injunction now and leave it to the judge hearing the summons to decide whether he or she should discharge the injunction in several weeks' time.

10. The clients of Mr Wong were and are still directors of the boards of the two companies in question. It is true that they were not and they are not in control of the boards, but as directors, they are entitled to attend the meetings of the boards and they are, as a matter of law, entitled to access the minutes and documents of the companies. If their rights as directors were or are infringed, there are avenues in law available to them to redress the wrongs; if necessary, they can go for injunctions or other appropriate relief. So in those circumstances, in my judgment, the overall objective of the court in this sort of situations must remain the preservation of the status quo. This is of course said without prejudice to the substantive hearing of the summons in question. That said, I believe that this consideration which was also relied on by the two Petitioners when they went before the learned Deputy Judge, was also on the forefront of the learned Deputy Judge's mind when he granted the ex parte injunction.

11. So for all these reasons and bearing in mind the overall circumstances of this case, I am not prepared to discharge the ex parte injunction at this stage. Instead I would give directions for the filing of evidence and the hearing of the summons. Mr Wong, very fairly and reasonably accepts that in the event he is not successful in persuading me to discharge the ex parte injunction on the ground argued by him this morning, the ex parte injunction should be continued pending the hearing of the summons. I agree that that is the fairest way to proceed with the application.

12. As regards the directions to be made, having heard the parties further, I give leave to the 1st and 5th Petitioners to file and serve their evidence in reply by 4:00 p.m. on 21 October 2002, and I order that the hearing of the summons of the two Petitioners be adjourned to 25 October 2002 at 10:00 a.m. before the summons judge. I further order that the ex parte injunction granted by Deputy High Court Judge Woolley on 2 October 2002 be continued to 25 October 2002 or until further order. Costs reserved.