TAN MAN KOU AND ANOTHER v. CHIME CORPORATION LTD AND OTHERS

HCMP 4146/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4146 OF 2001

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R U L I N G

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1.  This is a summons for directions issued by the petitioners on 13 August 2004, seeking further directions on the filing of pleadings and discovery, in view of the amendments made to the petition on 3 March 2004, which incorporate allegations relating to the loans made by the 1^st respondent herein, Chime Corporation Limited (“Chime”), to Chinachem Agencies Ltd (“CAL”), and the amendments made to the petition on 30 June 2004, which include allegations relating to the payment of emoluments to directors by five subsidiaries of Chime.

2.  Mrs Nina Wang, the 2^nd respondent herein opposes the application for further directions.  Her position is adopted by the 3^rd, 6^th to 9^th respondents.  Chime says it adopts a neutral position, although it also contends that it would be pre-mature at this stage for the court to give further directions.

3.  Mrs Wang has lodged an appeal to the Court of Final Appeal regarding the CAL loan amendment, which goes to the jurisdictional ambit of the power to grant relief under s168A of the Companies Ordinance, Cap.32.  This appeal is to be heard in about 2 months’ time, on 24 and 25 November 2004.

4.  Mrs Wang has also lodged an appeal to the Court of Appeal in respect of all the amendments allowed to be made on 30 June 2004, including the directors’ emoluments.  As I gather from the Notice of Appeal, the main complaint relating to the directors’ emoluments is that the allegation pleaded by the petitioners is deficient as lacking in material particulars.  That appeal is to be heard in about 6 months from now, on 10 March 2005.

5.  Mr Poon SC for Mrs Wang submitted that the court should not give further directions at this stage, not until the 2 appeals of Mrs Wang have been determined.

6.  He said he is not asking the court to stay the petition pending the appeal, although that would appear to be effect of what he is seeking.  He submitted it is just a matter of sensible case management not to order pleadings and discovery until after the 2 appeals have been determined, as the outcome of the appeals would affect the scope of the petition.  For the respondents to respond to the CAL loan allegation and the directors’ emolument allegation, this would involve a great deal of time, resources and expense.  Mrs Wang went into great lengths in her affirmation filed in opposition to this application as to the work to be involved on her part, on the part of the senior management of Chime, her legal advisers and a team of professional accountants to be engaged, before she could properly plead to these allegations.  She said it would be impossible to complete the “first stage” of the review of the relevant information and documents before the hearing of the appeal in the Court of Final Appeal in November 2004 and possibly, the hearing of the appeal in the Court of Appeal 6 months from now.  She has not given any indication of how long the second or subsequent stages of the review exercise would take.

7.  It was said on Mrs Wang’s behalf that if her appeal should be successful, the substantial time and costs that would be incurred in preparing pleadings and giving discovery would all be wasted.

8.  The CAL loan amendments were made to the petition as early as March 2004, the directors’ emoluments amendments were made in June 2004.  If I understand Mrs Wang’s affirmation correctly in that a decision was made to do no work to prepare for her defence to meet these allegations, until she is ordered to file a defence within a specific time, I would find that unacceptable, particularly in view of the substantial work she said would be required.  Any work done with the view of enabling Mrs Wang and the other respondents to prepare for their defence to the added allegations, would not, in my view, be wasted.  Certainly, for the CAL loans, even if Mrs Wang should succeed in the Court of Final Appeal, she would need to meet identical allegations in a derivative action brought by the petitioners, for which a generally indorsed writ has been issued in July 2003.  And if substantial work is required to be undertaken for the defence of these allegations, there is even greater reason why the court should give directions today and lay down a timetable so that the parties should start work right away instead of 6 months from today.

9.  I therefore reject the submission of the respondents that I should defer giving directions until the appeals of Mrs Wang have been disposed of.  I will hear the parties on the time to file pleadings and to give further discovery.