HOPECHEER INVESTMENT LTD v. CHAN SIU CHUNG

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

-----------------

-----------------

DECISION

-----------------

1. This is an application for an interlocutory injunction. The result of this application gives me no satisfaction whatever. It was commenced on 6th October this year and the Plaintiff, Hopecheer Investment Ltd. claimed an injunction against the Defendant, Mr. Chan Siu Chung restraining him from acting on behalf of the company in revoking or appointing solicitors for the company in High Court Actions No. 11989 of 1994 and A7308 of 1995 or from doing any act or acts for and on behalf of the company in respect of the aforesaid two actions and such power be vested in the Plaintiff until the hearing of the action herein or until further order. It is necessary to set out a little bit of the background of this case.

2. On 12th November 1993, there was an agreement signed between the Plaintiff, Hopecheer Investment Ltd. and Chan Siu Chung for the sale of 27,000 shares in Strong Winner Investment Ltd., that appears to be a company running a restaurant. The money for the shares does not appear to have been paid immediately but by April of this year the full sum of $2,880,000 was paid. Meanwhile, the Plaintiff took over the running of the restaurant and seems to have been running the business of Strong Winner Investment Ltd.

3. All went well until December of last year when the first in a chapter of disasters in this case struck. The leases on the company's premises were coming to an end, notices to quit were served and the clauses in those leases were not exercised to renew them. Proceedings had already been commenced under High Court Action 11989 of 1994 to terminate the leases on the basis of change of management without the consent of the landlord but new proceedings were commenced in A7308 of 1995.

4. Then came a further series of events. Judgment was entered in that latter action on 16th September and there was a dispute as to whether solicitors who were appointed effectively by Mr. Chan, who remains one of the directors of Strong Winner Investment Ltd. should represent that company or whether the solicitors chosen by Hopecheer Investment Ltd. should represent it.

5. The writ in this Action was issued on 25th September and on 4th October, an ex parte application in terms of the summons which I have recited was taken out before Waung J. That was adjourned over and although there was short service the inter partes summons was heard on 6th October.

6. Now, quite understandably at that stage the Judge considered that the parties should come to some arrangement. Indeed it seems to make sense to me that the conduct of proceedings in respect of the leases should have been given to the people who were actually running the restaurant at the time, that is those who were running the business of Strong Winner Investment Ltd.; they seem to be the people who had the ideas as to what defences were available and the matter was adjourned by the Judge. I wish to say a little bit about how this matter came to be fixed today.

7. There was a letter written on 10th October by the Plaintiff's solicitors to the Defendant's solicitors saying that they would be attending the Clerk of Court's office on Wednesday 11th October for the purpose of restoring the inter partes summons, with an estimated length of two days. The Defendant's solicitors were requested to send along a representative, failing which a day would be fixed in their absence. That letter was wholly wrong. There is now a procedure for interlocutory injunctions. They are to be heard on a Friday and the only person who may give leave to fix a day other than a normal summons day is the judge in charge of that particular summons on summons day. The hearing was then fixed for to-day some 6 weeks later. Unless there are very special reasons a summons for an interlocutory injunction should be made returnable on the next summons day allowing 2 clear days' notice for service.

8. The whole purpose of summons day is that applications are heard promptly and usually they will be heard without reference to the availability of counsel of the choice of a particular party because summonses for injunctions are urgent matters and there are now enough counsel in Hong Kong to be available to take cases on. In addition solicitors also have the right of audience.

9. As a result of that letter, however, it appeared that one or other of the counsel and I know not which was not available until today, and hence a period of over 7 weeks was quite unnecessarily allowed to elapse. Unfortunately, any difficulties which the parties have now got into by reason of this matter becoming more than urgent are of their own making. The facilities for the early hearing of an injunction have been given to the parties and they should have been taken.

10. In respect of the 7308 Action, there were a series of hearings and on the 11th October, two matters came before the Master. One was a summons to set aside the judgment and the Master made an order that that should not be heard until Waung J. had decided who was to represent the Defendant - Strong Winner Investment Ltd. There was also a summons which was taken out on short notice the previous day to intervene and that was ordered to come on at the same time as the summons to set aside.

11. Unfortunately, the Master's directions were breached and they were breached by consent to the detriment it appears of the Plaintiff. There was a summons that was heard on 16th October. It was taken out by the solicitors for the Defendant in this action to apply for a stay of execution pending the outcome of the summons to set aside. The 16th October summons was heard on 19th October and as I have indicated counsel, who then appeared for the company, instructed by the solicitors engaged by the Defendant, and who are appearing for the Defendant today, consented, without the attendance of the solicitors whom the Plaintiff wished to instruct and without informing them, to the advancement of the hearing of the application to set aside the judgment. That failed. Now at the end of next week, it appears that the final hour has come for the company in respect of its leases.

12. There has been relatively little provided for me as to the merits on the question of setting aside the judgment in respect of the leases. There is a draft defence that clearly did not find favour with the Master and indeed Mr. Mumford Q.C., who appeared on behalf of the Plaintiff, indicated that there would have to be more provided than that draft defence. What more would have to be provided and what could be provided I know not. I have not been shown any affidavit or draft affidavit that might be used on an application to set aside.

13. Mr. Pow, who appears on behalf of the Defendant has raised a number of points in opposition to this summons. But in essence, the point which unfortunately seems to me to be something which the Plaintiff cannot avoid is a very simple one.

14. The control of the company, Strong Winner Investment Ltd. is in the hands of the directors of the company. The directors of a company are quite separate from the shareholders. No steps have been taken at any rate in Court to arrange for the obligation under the contract to have new directors appointed until the last minute. Indeed on 22nd November, in other words, less than 2 days ago, a further summons was taken out for a mandatory injunction to compel the Defendant to honour his obligations under the contract. Unfortunately, that is short notice. Mr. Pow said, not unreasonably, that in view particularly of some of the evidence, he needed time to answer the evidence and that summons has not been proceeded with today.

15. As to the rest of the points which have been raised by the Defendant, I wish to say very little, other than that there has been no affidavit or affirmation sworn by the Defendant. The affirmation sworn by the solicitors is guarded in the extreme. The averment in the defence that the Defendant cannot remember how much money has been paid to him under the contract, appears to me not even to be worthy of comment.

16. As I say I have great symphathy for the Plaintiff, that things have been allowed to get to this pitch. Unfortunately, as I see it, the matter is too late and counsel for the Plaintiff has been unable to devise a form of order which, in my view, would be effective to give some relief and would be within the bounds of what should be given at this stage.

17. I, therefore, regret that I have to make no order on this summons.