Case Detail

HCA 2405/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2405 OF 2007

______________________

BETWEEN

	TSUI WAI KUEN	Plaintiff
	(suing on behalf of himself, being a shareholder of R J MODELS (H.K.) LIMITED
	and
	CHEUNG KING CHUNG RAY	1st Defendant
	WONG LAI PUN	2nd Defendant
	R J MODELS (H.K.) LIMITED (香港建築模型有限公司)	3rd Defendant
	黃靖惠	4th Defendant
	R J MODELS (ASIA) LIMITED	5th Defendant
	R J MODELS (GLOBAL) INC.	6th Defendant

______________________

Before : Deputy High Court Judge Carlson in Chambers

Date of Hearing : 26 November 2007

Date of Judgment : 30 November 2007

______________________

J U D G M E N T

______________________

Introduction

1. Having dismissed the Defendants’ application for a stay, I have heard the Plaintiff’s summons for a series of injunctions as appear in the body of his summons at pages 17-22 of the bundle. The factual background to this dispute has been set out by me in paragraphs 1-10 of my judgment of 26 November to which reference may be made. I do not propose to repeat that here again.

2. Mr Abraham Chan, who appears for the Defendants on this occasion, accepts that the factual dispute raises serious issues to be tried between the parties. That is a proper concession with the result that the Plaintiff has cleared the first hurdle. What I need to concentrate on are the issues of whether the balance of convenience favours the refusal of an injunction and the related issue of whether damages would be an adequate remedy.

The Argument

3. Mr Lau, for the Plaintiff, has stressed the fact that this is a passing-off action and has referred to a number of authorities in that type of case where interlocutory injunctions have been granted to restrain further acts of passing-off until the trial of the action. The decision of Whitford J in Alltransport International Group v Alltrans Express Ltd (1976) FSR 13 was a case where an interlocutory injunction went to restrain the defendant from passing-off its business as that of the Plaintiff. Whitford J observed that:

“ the Plaintiffs would suffer unascertainable damage pending the trial if no interim relief were to be granted, whereas the defendants would not suffer serious damage if they were prevented from using the name.”

This is the approach which Mr Lau urges on me.

4. Contrary to that view of the case, Mr Chan submits that this is in substance and reality a shareholder’s dispute in which a disgruntled minority shareholder is seeking redress by launching a section 168A Companies Ordinance Petition and a parallel derivative action. In my judgment, this is the correct characterisation, whilst not forgetting that the basis of the complaint is that the Plaintiff is said to be passing-off the new companies as the original Hong Kong company.

5. In addressing the balance of convenience, Mr Lau submits that it would not be possible to quantify the loss of business incurred by the Hong Kong company as a result of the passing-off. There is no way of telling how many existing clients and potential new clients will have been lost as a result of the establishment of the new companies. In such circumstances, where damages could not be properly identified the correct remedy would be the grant of the injunctions that are sought.

6. So far as the defendants are concerned, Mr Lau submits that there is no reason to believe, if they are restrained from using the name R J Models, that they will suffer any irreparable damage.

7. Mr Chan submits that in the event of the Plaintiff being successful at the trial of the action, the loss of profit is well capable of being quantified. The profits of the new companies would stand as the profit of the Hong Kong company and Mr Chan has, on instructions, offered an undertaking in the following terms which should provide considerable comfort to the court and, in turn, to the Plaintiff:

“ The 1^st, 2^nd, 4^th, 5^th and 6^th Defendants hereby undertake to (a) give account and (b) provide access to all relevant documents and information to the Plaintiff in respect of all business and transactions of the 5^th and 6^th Defendants from the time of their incorporation until the resolution of the present action.
In respect of (a) above, the 1^st, 2^nd, 4^th, 5^th and 6^th Defendants further undertake to instruct [independent accounting firm of standing] to conduct a monthly audit of the businesses conducted by the 5^th and 6^th Defendants, and to provide a monthly audit report to the Plaintiff.”

8. Mr Chan has also referred to a decision of Brightman J (as he then was) in John Walker & Son Ltd v Rothman International Ltd & Anr (1978) FSR 357 which was also a passing-off action. In that case, the judge refused the application for an interlocutory injunction. He held on the evidence that:

(i) there was, as here, a serious issue to be tried;
(ii) that there was a risk of unquantifiable damage to the Plaintiffs if the application were refused and they should be successful in the action. In the present case such a risk exists but in my view it is likely to be a small risk for the reasons that I have given in the previous paragraph;
(iii) that there was a certainty of unquantifiable damages to the Defendants if the application was granted and the Plaintiffs were unsuccessful at trial. In the present case, I am satisfied that this must also be so because it will be impossible to tell what contracts the Defendants would have failed to obtain as a result of the injunction.
(iv) that where both parties might suffer unquantifiable damage, the status quo should be maintained unless there were compelling reasons to the contrary.
(v) In the case before Brightman J, there were compelling reasons to the contrary, namely only a risk of unquantifiable damage to the Plaintiff yet a certainty of unquantifiable damage to the Defendant.

9. In his analysis, Brightman J, referring to the status quo and when it should be preserved said this [the foot of p.362 to the middle of p.363]:

“ At the next stage of the American Cyanamid analysis it is laid down as a counsel of prudence, where other factors appear to be evenly balanced, to take such measures as are calculated to preserve the status quo. I respectfully adopt in this connection what was said by Sir John Pennycuick in Fellowes & Son v. Fisher [1976] Q.B. at 141:
‘ By the expression ‘status quo’ I understand to be meant the position prevailing when the defendant embarked upon the activity sought to be restrained. Different considerations might apply if the plaintiff delays unduly his application to relief.’
Unless, therefore, there are compelling reasons to the contrary I am led at this stage to the conclusion that the plaintiffs are entitled to the relief that they seek, so I must ask myself: Are there compelling reasons to the contrary? I think that there are. First, if the plaintiffs are refused an injunction but succeed at the trial they will in the meantime run only a risk, and not a certainty, of damage and it is a risk which in the short term appears to me somewhat remote, having regard to the reputation of the Rothman Group of Companies. Per contra, if the plaintiffs are granted an injunction but fail at the trail the defendants incur the certainty of unquantifiable damage.”

10. It seems to me that this is the appropriate approach for me to adopt applying the facts as they presently stand before me. I have already held that the plaintiff only faces a risk of unquantifiable damage and for the reasons which I have given the risk would only relate to a limited amount of damage because it would appear that the Defendant companies are merely carrying on the business of the Hong Kong company with the result that their profit would be the profit that the Hong Kong company would have obtained. Nevertheless, if the Defendants are made the subject of the injunctions asked for there is a certainty of unquantifiable damages. It is for these reasons that Mr Chan submits that the status quo as defined by Sir John Pennycuick supra should not be preserved and the matter should therefore be allowed to go to trial. If the Plaintiff succeeds, there are ample grounds to expect that the Plaintiff will be fully compensated. It seems to me that Mr Chan’s analysis is the correct one in this case. Overwhelmingly, the balance of convenience favours a refusal of the injunction. One other matter which I should also refer to which will sound in the discretion is that there has been a real element of delay by the Plaintiff from July to November before this application was brought. Initially, he came in the Companies Court asking for a winding-up order and/or a purchase of his shares by Mr Cheung. He then abandoned the application to wind-up the Hong Kong company and later on brought this action after which he applied for these injunctions. In the meantime, the Defendant companies have been allowed to trade actively. It seems to me that I ought to have regard to this delay as an additional factor for refusing the injunctions.

11. Accordingly, upon the Plaintiff’s undertaking, which I have set out above which I accept and which will provide the Plaintiff with sufficient comfort, I will dismiss the summons with an order nisi that the costs should be to the Defendants in any event.

(Ian Carlson)
Deputy High Court Judge

Raymond Lau, instructed by Messrs C Y Tsang & Co., for the Plaintiff

Abraham Chan, instructed by Messrs Augustine C Y Tong & Co., for the 1^st, 2^nd, 3^rd, 4^th, 5^th and 6^th Defendants

HCA2405/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2405 OF 2007

______________________

BETWEEN

	TSUI WAI KUEN	Plaintiff
	(suing on behalf of himself, being a shareholder of R J MODELS (H.K.) LIMITED
	and
	CHEUNG KING CHUNG RAY	1st Defendant
	WONG LAI PUN	2nd Defendant
	R J MODELS (H.K.) LIMITED	3rd Defendant
	黃靖惠	4th Defendant
	R J MODELS (ASIA) LIMITED	5th Defendant
	R J MODELS (GLOBAL) INC.	6th Defendant

______________________

Coram : Deputy High Court Judge Carlson in Chambers (Open to public)

Date of Hearing : 23 November 2007

Date of Ruling : 26 November 2007

______________________

R U L I N G

______________________

Introduction

1. It is helpful to begin with the background to this dispute before I turn to the two summonses which are before me. This, in essence, is a now bitter dispute between Mr Tsui, the plaintiff, and the 1st Defendant, Mr Cheung, who had been friends since secondary school. Their company, R J Models (Hong Kong) Limited (“the Hong Kong Company”) is the maker of scale construction models from which a viewer can see what a large civil engineering development like a development of flats or a resort will look like on completion.

2. Mr Cheung has 60 per cent of the Hong Kong Company’s shares less one, which is owned by his mother, Mrs Wong Lai-pun, and 40 per cent are owned by Mr Tsui. The Hong Kong Company was incorporated in Hong Kong on 11 September 1998 and has proved to be highly successful so that by June this year its annual turnover was, according to Mr Tsui, in the order of $80 million with profits in excess of $30 million.

3. In about 2000 it was decided that a company should be formed in Shenzhen bearing the name R J Models (SZ) Limited. Shenzhen would become the manufacturing base for these models. A factory was established, which now employs about 300 people. The shareholding in the Shenzhen company was held equally between Mr Tsui and Mr Cheung. In about 2001 the two of them agreed that all the shares in the Shenzhen company should be transferred to the Hong Kong Company. This appears to have happened without dispute or mishap. The affairs of the company prospered, with the Shenzhen operation being the company’s manufacturing arm.

4. On a fair reading of the affirmations it would appear that the genesis of the dispute, resulting in proceedings in this court and in the courts of Shenzhen, was Mr Cheung’s decision to establish another business with a name similar to the Hong Kong Company which would sell building materials, with this new company being a subsidiary of the Hong Kong Company. Mr Cheung says that he also discussed with Mr Tsui setting up a new holding company to be used as “a corporate vehicle to hold the entire business portfolio of the R J group of companies”.

5. Following those discussions, according to Mr Cheung, Mr Tsui instructed accountants to form a holding company in which he and Mr Cheung would each have a 50 per cent shareholding. Upon hearing of this split in the shareholding, Mr Cheung challenged Mr Tsui over this because he had expected that the shareholding would reflect the 60/40 per cent division which had always been the position between the two of them. He says that Mr Tsui did not give him a satisfactory explanation and the restructuring did not proceed. This disagreement caused a deterioration in their relationship.

6. On 4 June 2007, Mr Cheung says that he offered to buy out Mr Tsui’s shares for $4 million, which Mr Tsui said he would consider and give a reply on 11 June. It is at this point that, on the affirmations, there is the sharpest dispute about the events that followed. Mr Tsui’s case is that, in effect, Mr Cheung, with the assistance of his mother and his wife, have hijacked the company’s business by forming other companies with virtually identical names to the Hong Kong Company, two of which are the 5th and 6th defendants in this action. Mr Tsui complains that Mr Cheung has diverted the company’s business to new companies that he has formed and informed the Hong Kong Company’s customers that Mr Tsui is no longer a director nor involved in the business. Mr Tsui says that Mr Cheung is now “passing off” the new companies that he has established since 4 June as the successors of the Hong Kong Company’s business. He has completely cut out Mr Tsui, removed him from the board and cut off his email accounts. The result is that the Hong Kong Company no longer trades. Business has come to a standstill and its bank account, with $6 million in it, frozen.

7. Mr Tsui says that in order to protect his position and that of the Hong Kong Company, on 4 June he removed the common seal of the Shenzhen company, its licence, cheque book, tax certificates and business registration certificates. Mr Cheung says that Mr Tsui engaged 108 security guards to block access to the factory premises. In the event he had to go to the Shenzhen courts and obtain orders directing Mr Tsui to desist in what he was doing and to secure the Shenzhen’s company’s seal and records.

The Litigation in Hong Kong

8. I now turn to the litigation in Hong Kong. On 12 July 2007 Mr Tsui presented a petition in the Companies Court under section 168A and section 177(1)(f) of the Companies Ordinance on the basis that Mr Cheung, as the majority shareholder, had conducted the affairs of the company in a manner “unfairly prejudicial” to the interests of Mr Tsui as the minority shareholder. He petitioned that Mr Cheung be ordered to purchase his shares in the company at a price to be determined by the court or further, and alternatively, that the company be wound up.

9. In September Mr Tsui decided to withdraw the prayer in the petition for winding-up so that he might start a common law derivative action, which is what he now has done by this action. The petition was amended without objection now leaving a prayer for the purchase of Mr Tsui’s shares by Mr Cheung.

Current state of affairs

10. I now turn to the current state of affairs. Mr Cheung continues to trade through his newly formed companies. The Hong Kong Company is now dormant. The prayer in the statement of claim seeks relief based on allegations that Mr Cheung, through his newly established companies is “passing off” these companies as that of the Hong Kong Company. The prayer is at pages 13 to 15 of the bundle. Amongst other relief, such as an inquiry as to damages to determine the losses suffered by the Hong Kong Company and the payment to it of such losses as may be established, Mr Tsui is seeking various injunctions to restrain the new companies (the 5th and 6th defendants) from using any names which might confuse them with the Hong Kong Company and to stop diverting business away from the Hong Kong Company as well as allowing him access to his email accounts with the Hong Kong Company.

The Summonses

11. From that background I now turn to the two summonses. The first in time is one taken out by Mr Tsui dated 16 November (pages 19 to 21) for interlocutory injunctions which largely mirror the prayer to the statement of claim save for the inquiry as to damages and payment out from that inquiry. The summons seeks to prevent a continuation of the passing off and the restoration to Mr Tsui of his email account. At pages 150 to 151 there is the defendants’ response, dated 21 November, being a summons to stay this action, as well as the summons for the injunctions, on the ground of lis alibi pendens. I have so far only heard argument on this later summons and will now proceed to give judgment on it. If I rule in favour of a stay I need go no further. If I refuse a stay, I will immediately proceed to hear and rule on the application for an injunction.

The Argument in favour of stay

12. Mr Dennis Kwok, who appears for the defendants in support of a stay has very helpfully drawn my attention to the essential authorities which relate why the court should stay the current proceedings, where not to do so may result in inconsistent findings and additional unnecessary costs. Mr Kwok submits that this is a clear case of lis alibi pendens with an identity of parties and issues as between Mr Tsui as plaintiff, Mr Cheung as the 1st defendant, his mother as the 2nd defendant and the Hong Kong Company as the 3rd defendant.

13. In Linfield v Taoho Design Architects Limited & Others HCCT68/2001 (unreported), Ma J, as the Chief Judge then was, really applying the well established English authorities, set out the principles which should guide a court in deciding a matter such as this. I gratefully and respectfully adopt what he said at paragraphs 9 to 14 of his judgment, which I now propose to set out in full.

“ Principles governing stay of proceedings
9. The power to stay proceedings is discretionary and is stated in wide terms in section 16(3) of the High Court Ordinance:
‘ (3) Nothing in this ordinance shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where if it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.’
10. This a statutory codification of an inherent jurisdiction that the court has exercised for many years: see The Nedlloyd Colombo [1995] 2 HKC 655, at 662D-I.
11. Sometimes, the court is called upon to stay proceedings where there exists an arbitration agreement, exclusive jurisdiction clause or on the basis of forum non conveniens or lis alibi pendens. The present summons approximates roughly to the latter category of application in which, briefly put, a party seeks a stay of proceedings on the basis that there are concurrent proceedings elsewhere dealing with the same or similar subject matter.
12. I say ‘approximately roughly’ because there is an important distinction between the present application and an application for a stay based on lis alibi pendens. In lis alibi pendens cases, there is not only identity of subject matter but also identity of parties. Even when both these features exist, a stay is not automatically ordered if it can be shown that there is a legitimate purpose in proceeding with two sets of proceedings: see Abidin Daver [1984] AC 398, at 411G-412A.
13. In the present case, a stay is sought where there exist multiple proceedings but not involving the same parties. What then are the applicable principles in such type of applications?
14. One starts with the basic principle: what would serve the ends of justice between the parties to the litigation and as far as the administration of justice is concerned? This recurrent theme can be found in all cases involving stays on the basis of lis alibi pendens: see The Abidin Daver at 412B-D (noting in particular the well known words of Lord Diplock, ‘It is a receipt for confusion and injustice’). I have also found helpful a statement of principle contained in the judgment of Sellers LJ in Compagnie Nouvelle France Navigation SA v Compagnie Navale Afrique Du Nord [1966] 1 Lloyds Representative. 477, where at 487(1), he said:
‘ The guiding principles are:
(1) that the stay must not cause injustice to the claimant in the arbitration, and
(2) that the applicant for a stay must satisfy the court that the continuance of the arbitration would be oppressive or vexatious to him or an abuse of the process of the court: in short, that it would be unjust.’
I would add that where a plaintiff institutes proceedings as of right (and not in breach of an arbitration agreement or exclusive jurisdiction clause) he is not to be deprived of carrying on those proceedings unless very good reasons exist to the contrary.”

14. From these principles Mr Kwok feels able to say that no injustice would be caused to the plaintiff if the action is stayed because he will still be able to have the same issues adjudicated in the section 168A petition. The factual background is of course common to both matters as are the factual disputes. Mr Kwok submits that it would be a recipe for, at the very least, disorder if two courts are required to decide the same factual issues with a prospect of inconsistent findings. Because the 4th, 5th and 6th defendants are not parties to the section 168A matter, Mr Kwok has instructions that these three defendants will agree to being joined in the section 168A petition if this action is stayed and if Mr Tsui applies to have them joined in the other matter.

The Plaintiff’s response

15. Mr Lau submits that whilst the factual background is common to both proceedings, there is by no means a complete identity of issues and, of course, at present the 4th to the 6th defendant are not in the section 168A petition. Only on the very eve of the hearing was he told of the offer by these three defendants to be joined in the petition.

16. He has referred to the decision of Kaplan J in Prime Aim International Limited v Cosmos-Pavis International Limited & Others [1994] 2 HKC 545 in which the plaintiff had, as here, initiated S. 168A proceedings in which injunctions were applied for seeking disclosure of certain documents and for an order that the plaintiff should purchase the defendants’ shares in the company. Subsequently the plaintiff brought a derivative action against the defendants. The basic factual allegations in the derivative action were essentially the same as those set out in the S. 168A petition but the relief was different and related to restitutionary claims. The registrar struck out the derivative action, holding that everything asked for in that action could and should have been included in the S. 168A petition. The point at issue in that case was whether the terms of S. 168A were wide enough to include the order for restitutionary relief asked for in the derivative action. There was an appeal by the plaintiff to Kaplan J. He allowed the appeal. The basis of his decision is adequately, for these purposes, set out in the holding of the headnote to the report. It is in these terms:

“ (1) it is only in plain and obvious cases that an action should be struck out. This was not a case in which the plaintiff’s claim was ‘obviously unsustainable’. The wording of section 168A of the ordinance was not so clear as to render it plain and obvious that the plaintiff was abusing the process of the court in issuing the writ and statement in the derivative action.
(2) there was the potential for wasted time and expense should the derivative action and the former action proceed independently of one another. The court ordered that both sets of proceedings be listed for an early interlocutory hearing before the Companies judge to allow him to consider how best to proceed and perhaps to order that both proceedings be heard together with a consequent saving in time and cost.”

17. While I have not been specifically referred to the terms of section 168A, it seems to me helpful to consider the terms of subsection (2)(a) - (c) which set out the court’s relevant powers :

“ If on any petition under this section the court is of the opinion the company’s affairs are being conducted in a manner unfairly prejudicial to the interests of some part of the members, whether or not such conduct consists of an isolated act or series of acts, the court may, with a view to bringing to an end the matters complained of -
(a) make an order restraining the commission of such an act or the continuance of such conduct;
(b) order that such proceedings as the court may think fit shall be brought in the name of the company against such person and on such terms as the court may order; (c) make such other order as it thinks fit, whether for regulating the conduct of the company’s affairs in the future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise.”

18. What is very plain is that the court’s powers are intended to be wide-ranging so as to do justice between the parties. It strikes me that I should examine with care what it is that the plaintiff is asking for in this action, which perhaps he may not be entitled to obtain under section 168A. The prayer in the petition will require the court to value the plaintiff’s shares. In doing so it will need to consider the plaintiff’s complaint that Mr Cheung has established other companies and is now passing them off as the Hong Kong Company, with the effect that the Hong Kong Company has been sent into terminal decline, which will have very adversely affected the value of the plaintiff’s shares in it. This is the same exercise the court will undertake in its inquiry for damages in this derivative action. To this very considerable extent there is a very large measure of overlap between these two sets of proceedings. Mr Kwok submits that where the section 168A petition is well advanced in terms of exchange of affirmations and discovery, staying this action will cause no injustice to Mr Tsui, who will in fact get a hearing sooner than he will if he persists with this action. Unquestionably, this is a factor that must sound in the exercise of my discretion.

19. This overlap having been identified, I do not believe that the issues are completely identical. In this action the injunctive relief sought is different from what would be expected of a court under a section 168A case. The plaintiff has brought this action as of right. He has joined the appropriate defendants in this action who he says harm the company’s interests and against whom he seeks redress. He ought, in this circumstance, to be able to pursue this action on its merits. It seems to me that Mr Lau is correct in saying that any risk of inconsistent findings can be eliminated by directing that this action should be heard together with the section 168A petition. The judge assigned to hear the case can give directions as to the order in which they are to be heard. It strikes me that much of the discovery that has already been provided in the section 168A case will also be able to stand in this action, as will much of the evidence. This current case should be able to be brought up to speed so as to be at the same state of preparedness as the section 168A case within a very short period of time. As matters presently stand, Mr Kwok has not been able to show that this is one of those plain and obvious cases where this action should be stayed. Mr Tsui has brought a perfectly legitimate derivative action which he must be able to pursue. It may be that if the trial judge decides to hear this first he will then be left with a relatively straightforward task of valuing Mr Tsui’s shares in the company and directing their purchase at that valuation by Mr Cheung.

20. Accordingly, I will dismiss this summons and direct that after I have ruled on the summons for the injunction, the two actions should be heard by the same judge who will decide, at an interlocutory hearing, the order in which they will be tried and whether, and to what extent, the evidence and discovery in one proceeding can stand in the other. I will now hear counsel on costs and then proceed to hear the application by Mr Tsui for the various injunctions that he seeks.

(Ian Carlson)
Deputy High Court Judge

Raymond Lau, instructed by Messrs C.Y. Tsang & Co., for the Plaintiff

Dennis Kwok, instructed by Messrs Augustine C.Y. Tong & Co., for all Defendants

TSUI WAI KUEN v. CHEUNG KING CHUNG RAY AND OTHERS

Files (2)

“	The 1^st, 2^nd, 4^th, 5^th and 6^th Defendants hereby undertake to (a) give account and (b) provide access to all relevant documents and information to the Plaintiff in respect of all business and transactions of the 5^th and 6^th Defendants from the time of their incorporation until the resolution of the present action.
	In respect of (a) above, the 1^st, 2^nd, 4^th, 5^th and 6^th Defendants further undertake to instruct [independent accounting firm of standing] to conduct a monthly audit of the businesses conducted by the 5^th and 6^th Defendants, and to provide a monthly audit report to the Plaintiff.”

(i)	there was, as here, a serious issue to be tried;
(ii)	that there was a risk of unquantifiable damage to the Plaintiffs if the application were refused and they should be successful in the action. In the present case such a risk exists but in my view it is likely to be a small risk for the reasons that I have given in the previous paragraph;
(iii)	that there was a certainty of unquantifiable damages to the Defendants if the application was granted and the Plaintiffs were unsuccessful at trial. In the present case, I am satisfied that this must also be so because it will be impossible to tell what contracts the Defendants would have failed to obtain as a result of the injunction.
(iv)	that where both parties might suffer unquantifiable damage, the status quo should be maintained unless there were compelling reasons to the contrary.
(v)	In the case before Brightman J, there were compelling reasons to the contrary, namely only a risk of unquantifiable damage to the Plaintiff yet a certainty of unquantifiable damage to the Defendant.

“	At the next stage of the American Cyanamid analysis it is laid down as a counsel of prudence, where other factors appear to be evenly balanced, to take such measures as are calculated to preserve the status quo. I respectfully adopt in this connection what was said by Sir John Pennycuick in Fellowes & Son v. Fisher [1976] Q.B. at 141:
	‘	By the expression ‘status quo’ I understand to be meant the position prevailing when the defendant embarked upon the activity sought to be restrained. Different considerations might apply if the plaintiff delays unduly his application to relief.’
	Unless, therefore, there are compelling reasons to the contrary I am led at this stage to the conclusion that the plaintiffs are entitled to the relief that they seek, so I must ask myself: Are there compelling reasons to the contrary? I think that there are. First, if the plaintiffs are refused an injunction but succeed at the trial they will in the meantime run only a risk, and not a certainty, of damage and it is a risk which in the short term appears to me somewhat remote, having regard to the reputation of the Rothman Group of Companies. Per contra, if the plaintiffs are granted an injunction but fail at the trail the defendants incur the certainty of unquantifiable damage.”

“	Principles governing stay of proceedings
	9.	The power to stay proceedings is discretionary and is stated in wide terms in section 16(3) of the High Court Ordinance:
		‘	(3)	Nothing in this ordinance shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where if it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.’
	10.	This a statutory codification of an inherent jurisdiction that the court has exercised for many years: see The Nedlloyd Colombo [1995] 2 HKC 655, at 662D-I.
	11.	Sometimes, the court is called upon to stay proceedings where there exists an arbitration agreement, exclusive jurisdiction clause or on the basis of forum non conveniens or lis alibi pendens. The present summons approximates roughly to the latter category of application in which, briefly put, a party seeks a stay of proceedings on the basis that there are concurrent proceedings elsewhere dealing with the same or similar subject matter.
	12.	I say ‘approximately roughly’ because there is an important distinction between the present application and an application for a stay based on lis alibi pendens. In lis alibi pendens cases, there is not only identity of subject matter but also identity of parties. Even when both these features exist, a stay is not automatically ordered if it can be shown that there is a legitimate purpose in proceeding with two sets of proceedings: see Abidin Daver [1984] AC 398, at 411G-412A.
	13.	In the present case, a stay is sought where there exist multiple proceedings but not involving the same parties. What then are the applicable principles in such type of applications?
	14.	One starts with the basic principle: what would serve the ends of justice between the parties to the litigation and as far as the administration of justice is concerned? This recurrent theme can be found in all cases involving stays on the basis of lis alibi pendens: see The Abidin Daver at 412B-D (noting in particular the well known words of Lord Diplock, ‘It is a receipt for confusion and injustice’). I have also found helpful a statement of principle contained in the judgment of Sellers LJ in Compagnie Nouvelle France Navigation SA v Compagnie Navale Afrique Du Nord [1966] 1 Lloyds Representative. 477, where at 487(1), he said:
		‘	The guiding principles are:
			(1)	that the stay must not cause injustice to the claimant in the arbitration, and
			(2)	that the applicant for a stay must satisfy the court that the continuance of the arbitration would be oppressive or vexatious to him or an abuse of the process of the court: in short, that it would be unjust.’
		I would add that where a plaintiff institutes proceedings as of right (and not in breach of an arbitration agreement or exclusive jurisdiction clause) he is not to be deprived of carrying on those proceedings unless very good reasons exist to the contrary.”

“	(1)	it is only in plain and obvious cases that an action should be struck out. This was not a case in which the plaintiff’s claim was ‘obviously unsustainable’. The wording of section 168A of the ordinance was not so clear as to render it plain and obvious that the plaintiff was abusing the process of the court in issuing the writ and statement in the derivative action.
	(2)	there was the potential for wasted time and expense should the derivative action and the former action proceed independently of one another. The court ordered that both sets of proceedings be listed for an early interlocutory hearing before the Companies judge to allow him to consider how best to proceed and perhaps to order that both proceedings be heard together with a consequent saving in time and cost.”

“	If on any petition under this section the court is of the opinion the company’s affairs are being conducted in a manner unfairly prejudicial to the interests of some part of the members, whether or not such conduct consists of an isolated act or series of acts, the court may, with a view to bringing to an end the matters complained of -
	(a)	make an order restraining the commission of such an act or the continuance of such conduct;
	(b)	order that such proceedings as the court may think fit shall be brought in the name of the company against such person and on such terms as the court may order; (c) make such other order as it thinks fit, whether for regulating the conduct of the company’s affairs in the future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise.”