WONG WAH ON v. TSUNG TSIN ASSOCIATION AND OTHERS

HCMP 2056/2018

[2019] HKCFI 3030

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2056 OF 2018

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D E C I S I O N

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1.  On 20 November 2018 the Petitioner issued a petition pursuant to section 724 of the Companies Ordinance (Cap 622), seeking various relief against the 2^nd to 10^th Respondents who have been holding themselves out as officers of the 1^st Respondent, which is a company limited by guarantee for the purpose of promoting the interests of the Hakka community in Hong Kong.

2.  It is the Petitioner’s case that on 22 May 2018 an extraordinary general meeting of the Company was convened at which members voted for the appointment of 95 members of the Company as the new “Executive Committee” of the Company.  The Respondents have failed to recognise this resolution and continued to hold themselves out as office holders of the Company and retained control of the Company’s books and records.

3.  The Petition sought in the prayer declarations and orders confirming that the members appointed by the resolution constituted the Executive Committee and consequential orders.

4.  The Petition came on before me on 10 January 2019. The Respondents did not appear.  I was satisfied that the Petition had been properly served.  Having read the evidence I made an order substantially in the terms sought in the Petition.

5.  On 4 March 2019 the Respondents issued a summons to  set aside the Order.  There is no dispute that the Order is regular. On 26 April 2019 the Respondents issued an application for a  stay of execution pending the hearing to set aside. This was refused by Recorder Linda Chan SC on 15 May 2019. The Respondents sought  leave to appeal, which was dismissed by the Recorder. On 9 July 2019 the Respondents’ application to the Court of Appeal for leave to appeal was also dismissed.  Lam VP gave reasons on behalf of the court on  18 July 2019. In those reasons Lam VP made the following observations about the application to set aside:

“13. In the present case, the judgment of Harris J was given after a trial of the petition which the 2^nd to 10^th Respondents chose to be absent and filed no evidence in opposition. Mr Khaw readily accepted that it was a regular judgment. There was no reason why these Respondents could not have filed the evidence (which they now relied upon in the setting aside application) to oppose the petition before the hearing before Harris J on 10 January 2019.

…

20. The evidence of the respondents (filed in the application for setting aside the judgment) which was placed before us consisted mostly of assertions and bare statements.

…

22. Mr Khaw submitted that the Recorder did not address the merit of the setting aside application.  This was hardly surprising in light of the way in which the case was argued by Mr Koo before the Recorder.  According to the transcript, Mr Koo did not advance any substantive submissions on the merit.  In any event, as we have seen above, we do not see any strong merit in the setting aside application.”

6.  The application to set aside was listed for hearing before me on 24 July 2019.  It was only listed for 30 minutes and by agreement of the parties it was adjourned until 3 December 2019; although I would note  in passing that although the parties requested that it be adjourned for two hours argument; it ended up taking a full day.

7.  There is no dispute about the principles by reference to  which the court determines applications to set aside a regular judgment after trial pursuant to Order 35 Rule 2.  They are summarised in  Lau Kam Chuen v Lee Ching [i].

“(1) Where a party with notice of proceedings has disregarded the opportunity of appearing at and participating in the trial, he will normally be bound by the decision.

(2) Where judgment has been given after a trial it is the explanation for the absence of the absent party that is most important: unless the absence was not deliberate but was due to accident or mistake, the court will be unlikely to allow a rehearing.

(3) Where the setting aside of judgment would entail a complete retrial on matters of fact which have already been investigated by the court the application will not be granted unless there are very strong reasons for doing so.

(4) The court will not consider setting aside judgment regularly obtained unless the party applying enjoys real prospects of success.

(5) Delay in applying to set aside is relevant, particularly if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it.

(6) In considering justice between parties, the conduct of the person applying to set aside the judgment has to be considered: where he has failed to comply with orders of the court, the court will be less ready to exercise its discretion in his favour.

(7) A material consideration is whether the successful party would be prejudiced by the judgment being set aside, especially if he cannot be protected against the financial consequences.

(8) There is a public interest in there being an end to litigation and in not having the time of the court occupied by two trials, particularly if neither is short.”

8.  The most important consideration is the reason why a defendant did not appear at the trial.  If it was the result of an unfortunate mistake for which a defendant has little culpability, for example, a mistake by legal advisers, that may, subject to the other considerations referred to in the previous paragraph, be sufficient.  It is not enough, however, for a defendant to explain that it was something more than indifference.  It must be something, which the court concludes represents a full and accurate explanation and one which justifies depriving a plaintiff of a regular judgment and putting a plaintiff to the trouble of proceeding to prove a case, which he had thought had been successfully concluded in his favour.

9.  I now turn to consider the Respondents’ explanation for not appearing at trial.  Before doing so I note that the reason for quoting from the Court of Appeal’s reasons is that Lam VP’s observations must be assumed to have put the Respondents on notice that the evidence that had been filed by 9 July 2019 was incomplete and unpersuasive.  I would also note that Mr Singh had served his comprehensive submissions in advance of 24 July 2019 hearing and, therefore, the Respondents have also had ample notice of his forensic critique of their explanation for not appearing at the trial and ample time to address it by filing further evidence, which addressed the critique if such evidence is available.

10.  Before turning to the Respondents’ evidence it is helpful to summarise the background against, which the Respondents’ response to service on them of the Petition falls to be considered.

11.  Article 34 provides that members of the Executive Committee shall hold office for three years, and be eligible for re-election.   On 28 October 2008 a general meeting took place for the election of a new Executive Committee.  The way in which the meeting was conducted was controversial, but even on the Respondents own evidence it seems to  me clear that no resolutions were passed re-appointing members of  the Executive Committee and that from that date onwards there was  no lawfully appointed Executive Committee, no Executive Standing Committee and, in so far as either the members of the Executive Committee or ESC were directors, no de iure directors of the Company.

12.  The Petition is not the only litigation in which questions concerning the governance of the Company have recently come before  the court.  In July 2018 a writ was issued by seven members of the Company (none being the Respondents) against the Petitioner and  the Company seeking orders that resolutions passed at an extraordinary general meeting convened on 24 September 2017 at the instigation of  the Petitioner are null and void.  The Statement of Claim shows that  the Plaintiffs’ solicitors were Liu, Choi & Chan (“LCC”) and counsel is recorded to be KM Chong and KW Lai.  I am told a defence has been served, but the proceedings have not progressed beyond that stage.

13.  There is no dispute that the Respondents were well aware before service of the Petition that the Petitioner takes the position that a new Executive Committee had been appointed and have disputed the validity of the resolutions the Petitioner contends were passed on 22 May 2018.

14.  The Company was formed on 2 May 1959.  Its articles have been amended overtime and are inelegant and in some respects obscure and clumsy.  The articles do not provide expressly for directors. Instead article 38 provides for an Executive Committee.  In its original form the articles provided in article 39 for a Standing Committee (known as the Executive Standing Committee “ESC”), which would be elected by members of the Executive Committee.  This was amended by a special resolution on 19 January 1982.  The revised article provides for a Standing Committee of 31 members and for the Committee to be known as the Executive Standing Committee.  Article 44 provides for appointments of Chairman and Vice Chairman.  It is unclear whether or not the ESC are intended to be directors within the meaning of the Companies Ordinance.  The Company is required to have directors and it seems to me that the articles are probably inconsistent with the Companies Ordinance and any of the versions enforce since 1959 and need review.  It would, however, appear that the parties have proceeded on the basis that members of the ESC are directors.

15.  Article 15 deals with the requisitioning of general meetings.

“The Executive Standing Committee may, whenever they think fit, convene an Extraordinary General Meeting, and Extraordinary General Meetings shall also be convened on the requisition in writing of 10 Members of the Executive Committee or 50 Members of the Association or on such requisition as provided by Section 113 of the Ordinance.”

16.  It seems to me that Article 15 allowed 50 members to requisition a general meeting by the ESC or to convene one themselves under section 113(3) of the Companies Ordinance (in its previous version) if the ESC did not do so.

17.  The Respondents’ initial round of evidence was filed in early March 2018.  It consisted of an affirmation of the 3^rd Respondent and affirmations from two solicitors.  It is only necessary for me to deal with the 3^rd Respondent’s evidence, which addresses the non-appearance on 10 January, although I note in passing that in attempting to describe the history of the matter, the 3^rd Respondent states in my view, almost certainly incorrectly, that the Petitioner is seeking to replace the duly elected and appointed 36^th Executive Committee and ESC: incorrect in that it seems in my view that as a result of the conduct of the 2010 AGM and the failure of the Executive Committee to convene any subsequent annual general meetings or other general meeting to resolve the re-appointment of the Executive Committee, there was no duly appointed Executive Committee at the time of the general meeting in May 2018.

18.  The 3^rd Respondent deals with the reasons for the  non-appearance in paragraphs 50 onwards.  He explains that after service of the Petition the Respondents agreed that the 3^rd Respondent should pass the Petition to Foo Tak Ching of LCC, who he says had acted for the Company in a number of matters over the years including HCA 1276 in which he acted for the Company.  He says “we contacted Mr. Foo and requested him to be our legal representative to oppose the Petition herein, and we were told by Mr. Foo and verily believe that he would do so  for us.”: paragraph 52.  The next thing that happened according to  the 3^rd Respondent was receipt by him and some other Respondents of a letter from my Clerk dated 1 February 2019 informing them of my judgment.  In paragraphs 54 to 55 the 3^rd Respondent explains:

“54. Upon our enquiry upon Mr. Foo, I was then informed by Mr. Foo and verily believe that since LCC had represented the 7 Plaintiffs in HCA 1276, in which the Association was named as the 2^nd Defendant, he was advised by counsel that it would be more appropriate for another legal team to act for the Respondents herein so as to avoid any possible conflict of interest. As a result, Mr. Foo found one Mr. Roger Leung (‘Mr. Leung’) of Messrs. Foo, Leung & Yeung (‘FLY’) to be the solicitor acting for us. Nevertheless, Mr. Leung was also advised by counsel that even FLY, of which Mr. Foo is a partner thereof, should not act for the Respondents for the reason of conflict of interest. Then, due to misunderstanding, Mr. Leung mistook that he was no longer instructed to act for the Respondents and thus did not take any step to oppose the Petition or attend the hearing on 10 January 2019 on behalf of the 2^nd to 10^th Respondents.

55. On the other hand, we all along presumed that Mr. Foo of LLC would oppose or handle the Petition on behalf of the Respondents, and did not know that in fact no one was representing us in the Petition.”

19.  Self-evidently, the 3^rd Respondent’s affirmation is short of the obvious detail one would expect such as when precisely Mr Foo was contacted, how, was there a retainer letter as the Law Society regulations require, was there any discussion about how the matter should be progressed, was there any discussion about the hearing on 10 January and why the 3^rd Respondent did not think to contact Mr Foo and ask about the progress of the matter prior to the hearing on 10 January or shortly thereafter.

20.  In his affirmation Mr Foo explains that he is 84 and a partner in LCC and also Foo, Leung & Yeung.  He confirms that he has acted  for the Company on a number of occasions.  He says that in or about November 2018 he was contacted by some of the Respondents who told him that they had received the Petition.  He was asked to oppose it to which  he agreed.  He then says he liaised with Lai Kam Wah.  There is no reference to precise dates, retainers, money on account, instructions from  the Respondents confirming authority to instruct counsel and agree fees or any document other than the Petition.  Mr Foo does not even tell the reader whether he received the Petition.  What Mr Foo does tell us is that counsel advised him that since LCC acted for the Company in HCA 1276 it was conflicted and could not act for the Respondents.  He explains what he did next in paragraph 6:

“… As a result, I found another partner in another firm of solicitors (FLY), Mr. Roger Leung (‘Mr Leung’), to take over the matter with an intent that FLY would become the firm of solicitors representing the Respondents in the Petition. Thereafter, LLC delivered to Mr. Leung of FLY various papers for him to take steps to oppose the Petition. Accordingly, I presumed that Mr. Leung of FLY would oppose the Petition on behalf of the Respondents, and thereafter I left all matters regarding the Petition to him.”

21.  Mr Foo does not tell us when he contacted Mr Leung. He does not explain why he did not think it is necessary to speak to the Respondents and confirm that they were happy for him to pass to Mr Leung the “various papers”, which he fails to describe.

22.  Mr Foo says that he had no further involvement with  the matter until early February when he was contacted by the  2^nd to 4^th Respondents, who told him about the Order.  He does not explain what he told the 2^nd to 4^th Respondents, who one would have thought would have asked Mr Foo to explain what had happened.  He then goes on  to explain that he contacted Mr Leung who told him that he had been  advised by counsel that his firm had a conflict and that he assumed Mr Foo would find another firm of solicitors.  Mr Foo exhibits no documents at all to his affirmation corroborating anything that he says.

23.  Mr Leung in his affirmation says that in or about December 2018 he was asked by Mr Foo to represent the Respondents  and thereafter LCC delivered to me “various papers”.

24.  In paragraph 3 he says having read the papers he found that Mr Lai had been instructed by LCC to give advice.  I note that Mr Leung does not exhibit any documents to his affirmation or explain what he had done with them.  He says he contacted counsel and was told that he also had a conflict by virtue of Mr Foo also being a partner in his Firm.   Mr Leung goes onto say this in paragraphs 3 to 5:

“3. … and that another firm of solicitors was to be arranged to act for the Respondents’ behalf.

4. Having heard that, I mistook that another firm of solicitors would be arranged to act for the Respondents’ behalf, and hence I took no further step to act on behalf of them in the Petition, and accordingly I did not attend the hearing of the Petition on 10^th January 2019 on behalf of any of the Respondents.

5. I have misunderstood from counsel’s words that some one or Mr. Foo would make arrangement for another firm of solicitors to act for the Respondents…”

25.  The implication of this poorly written evidence is that counsel had said that he would contact Mr Foo and tell him to find someone else.  Mr Lai had filed no evidence.

26.  Clearly the evidence that I have referred to is unsatisfactory.  As I have already noted the Court of Appeal in its July decision and Mr Singh through his skeleton argument filed for the 24 July 2018 hearing drew attention to the inadequacies of the evidence and one would have expected that in the period between July and December of this year  the Respondents would have taken steps to remedy this problem and they did file additional to which I now turn.

27.  The 4^th Respondent has filed an affirmation. The 4^th Respondent says that he was responsible for liaising with Mr Foo.   He says that that he had noted from the indorsement on the Petition that there was a hearing on 10 January 2019 and contacted Mr Foo a couple of times to enquire if anything needed to be done before the hearing and was told there was nothing and he would inform the 4^th Respondent if there was anything to be done.  The 4^th Respondent does not explain why he would have been talking to Mr Foo on a couple of occasions if this was the case and he does not explain how Mr Foo came to instruct counsel.   In paragraph 8 he goes onto explain that in early January 2019 he visited Mr Foo in his office to talk about the hearing and was told that it would  be a simple matter mainly for directions and that a lawyer would appear for the Respondents.  Mr Foo made no reference to such a meeting and  Mr Foo’s evidence is inconsistent with that of 4^th Respondent, because  he says that by January he had passed the matter to Mr Leung.   The 4^th Respondent goes on to say that on 9 January 2019 the Respondents were served with further papers (which was the Petitioner’s affirmation confirming the contents of the Petition).  He was surprised and sent a fax to Mr Foo and the 2^nd Respondent asking whether they needed to be sent to Mr Foo and also asking them to make arrangements for the hearing.   In paragraph 15 the 2^nd Respondent says that he was surprised to learn from Mr Foo that he and Mr Leung had the misunderstandings that led to the lack of representation.  He does not explain what he was told about  Mr Leung’s involvement, which if the earlier paragraphs of his affirmation are correct must have come as a surprise and annoyance to him.

28.  The final affirmation has been filed by the 2^nd Respondent, who is an 86 years old solicitor and considers himself the Chairman of the Executive Committee.  In paragraphs 9 and 10 of his affirmation the  2^nd Respondent says this:

“9. In respect of the Petition, I recalled that Mr. Lo sent a fax message addressed to me and Mr. Foo of Messrs. Liu, Choi and Chan (‘LCC’) on 9 January 2019, regarding the Association’s receipt of court documents served by the solicitors of Wong Wah On (i.e. the Petitioner herein), and seeking instruction as to whether it was necessary to send to the office of Mr. Foo a copy thereof. There is now produced and shown to me a true copy of the Fax Message dated 9 January 2019 (together with its English translation), being an exhibit marked ‘LKM-1’.

10. After I read the said fax message, I misplaced the copy thereof, and I am unable to locate the faxed copy.”

29.  The 2^nd Respondent does not say what he did after receiving the fax.  Neither he nor the 4^th Respondent have exhibited transmission reports.  Mr Foo has not filed a further affirmation confirming receipt of the fax and neither the 2^nd nor 4^th Respondents have explained whether  Mr Foo replied and, on the assumption that he did not, why they did not phone him.  As Mr Foo has not dealt with the fax in his affirmation the only inference that can sensibly be drawn is that he did not receive it.

30.  In my opinion the explanation proffered by the Respondents is manifestly incomplete.  It is very difficult to believe, for example, that no written communication or record has been kept by any of the Respondents, Mr Foo or Mr Lai.  The 4^th Respondent is a solicitor and presumably he must understand that the evidence adduced in the affirmations to which I have referred begs as many questions as it answers.  It is a fairly compelling inference that the Respondents have chosen not to explain precisely on what basis Mr Foo and Mr Lai were instructed and the full extent of the communications between the Respondents and Mr Foo. This invites the inference that if the court was told the full story it would be unhelpful to the Respondents.

31.  As I have explained the first criteria that the Respondents must satisfy is demonstrating through credible evidence an adequate explanation for their failure to attend trial.  If the evidence is clearly incomplete and invites scepticism the criteria has not been met.  That in my view is the position in the present case and for this reason I will dismiss the application to set the Order aside.

32.  Before turning to the subject of costs I would deal briefly with two further matters.  First, Mr Khaw argued that, on the assumption that  I was satisfied that an adequate explanation had been given, the criteria that there was merit in the defence was also met.  There were various limbs to this submission.  The Respondents say that they were not served with the requisitions or subsequent notices convening the May 2018 extraordinary general meeting.  Given the evidence of postage and the fact that so many members did receive notices I view this evidence with some scepticism. I accept that, as in my view there was no Executive Committee at the relevant time, the attempts to convene a meeting by requisition to the Executive Committee was probably ineffective.  However, it seems to me that there being no Executive Committee it was probably open to  the Petitioner to convene a meeting pursuant to the relevant provisions of the Companies Ordinance, regardless of whether section 113 of the Companies Ordinance (Cap 32), or section 568 of the new Ordinance (Cap 622), applies[1] as the Petitioner clearly had sufficient members supporting a requisition, and in the absence of an Executive Committee could have used the provisions of the Companies Ordinance to, as he did, convene a meeting himself. Mr Khaw argued that the notice of the  meeting was defective as it did not identify the relevant resolutions to be put before members.  It is correct that the notice only talks in general terms about the business to be conducted at the meeting and it is arguable that it was defective. However, the controversy is largely an exercise in futility. Clearly, the Petitioner or any other member able to gather the support  of 5% of members, which I assume includes the Respondents, although at the hearing neither counsel knew the precise number of members,  can convene a meeting and put to it an ordinary resolutions for the removal or addition to the Executive Counsel [2].  It follows that the Respondents could have done this following the January Order.  It is a matter for the members to decide who the Executive Committee consists of not the court and not a self-appointed group of elderly members such as the Respondents.   The Respondents would have more sensibly spent the relatively large sums of money incurred in the various applications to court including the completely unnecessary instructing of three counsel to appear before me, on convening an extraordinary general meeting.

33.  I will dismiss the application to set aside the Order. I will make a costs order nisi that the Respondents pay the Petitioner’s costs on a common fund basis to reflect what in my view has been an unnecessary and wasteful application.

HCMP 2056/2018

[2019] HKCFI 1442

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2056 OF 2018

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D E C I S I O N

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1.  This is an application by the 2^nd to 10^th respondents (“R2 – R10”) for leave to appeal against my order of 15 May 2019 dismissing their summons dated 26 April 2019 for an interim stay of execution of the Order made by Harris J on 10 January 2019, whereby the learned Judge made a Declaration that the petitioner (“P”) and other members of the New Executive Committee form the current Executive Committee of the Association and ordered R2 – R10 to within 14 days hand over the corporate records and documents of the Association to P and to the Principal Business Address of the Association (“Order”).

2.  As can be seen from the Decision of Harris J given on 10 January 2019, the learned Judge was satisfied that the EGM of the Association had been duly convened in accordance with the articles of association, the notices of the EGM were duly served and the quorum was present at the EGM, and the resolutions reconstituting the board were duly passed on a show of hands.

3.  The principle governing an application for leave to appeal against an interlocutory order is well established.  It is for the applicant to satisfy the court that the proposed appeal has a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard (SMSE v KL [2009] 4 HKLRD 125 at §17 per Le Pichon JA).

4.  Where, as here, an applicant is seeking to appeal against an exercise of discretion in refusing to grant an interim interim stay of execution of the Order, it has to be shown that the judge exercised the discretion under a mistake of law or in disregard of principle or under a misapprehension as to the facts or that he took into account irrelevant matters or failed to exercise his discretion or the conclusion which the judge reached in the exercise of his discretion was “outside the generous ambit within which a reasonable disagreement is possible” (Hong Kong Civil Procedure 2019, §59/0/54).

5.  In the draft Notice of Appeal, two grounds of appeal are raised.  

6.  Under the first ground, it is said that this court erred in law in holding that the court has no jurisdiction to stay execution of the Order under Order 45 rule 11 or the inherent jurisdiction of the court.  I do not think this ground has any prospect of success, for the following reasons.

7.  First, the suggestion that it was my holding that the court has no jurisdiction to order a stay under Order 45 rule 11 or inherent jurisdiction of the court is plainly wrong.  As is apparent from the brief reasons I gave during the hearing on 15 May 2019, I had considered R2 – R10’s application for interim interim stay under Order 45 rule 11 as well as inherent jurisdiction of the court.

8.  I had taken into account the fact that R2 – R10 had not applied to set aside the Order within seven days, being the time limit for setting aside a judgment made in the absence of a party under Order 35 rule 2.  It was only until 4 March 2019 that R2 – R10 belatedly issued a summons to set aside the Order and in the same summons, asked for an interim stay of execution of the Order pending determination of the summons.  The summons is returnable on 24 July 2019 before Harris J with 30 minutes reserved.  There was no explanation for the delay in making the setting aside application.

9.  I had taken into account the substantive point raised by R2 – R10 in support of their application for interim interim stay, that is, their former and current solicitors had misunderstood the need to represent them at the first hearing of the petition and, as a result, neither firm appeared at the hearing before Harris J on 10 January 2019.  This was self-evidently not a “new evidence” which had arisen after the Order, as required by an application made under Order 45 rule 11 (Tam Ho Man v Wong Kwok Tai HCA 4736/1985, 20 October 1986, p 2, per Hunter J (as he then was), as applied by the Court of Appeal in Credit Lyonnais v SK Global Hong Kong Ltd [2003] 4 HKC 104 at §§4 – 5).  For this reason, I did not accept R2 – R10’s contention that this was an appropriate case for the court to grant an interim interim stay under Order 45 rule 11.

10.  I had also considered R2 – R10’s alternative submission that even if the court considers the point raised by R2 – R10 does not fall within the purview of Order 45 rule 11, the court still has inherent jurisdiction to grant a stay, relying on Garry Law Man Kai & anor v Austciti Property LtdHCA 14750/1998, 6 November 1998, p 2.  I took the view that it appeared from Credit Lyonnais, in particular the discussion in §§5 – 6, that the court does have inherent jurisdiction (in addition to the jurisdiction under the relevant rules) to grant a stay of execution; and in exercising such jurisdiction, the court should approach the matter having regard to its exceptional nature, given that the court is being asked to deprive a successful party of the fruits of the judgment he has obtained.  I had considered, but was not satisfied, that R2 – R10 had shown any exceptional circumstances to justify the court granting an interim interim stay of the Order.

11.  As to the second ground of appeal, it is said that because R2 – R10 had not entered appearance in the petition nor attended the hearing on 10 January 2019, but have since entered appearance and issueda summons to set aside the Order, the court “shall have jurisdiction” under Order 45 rule 11 and inherent jurisdiction to stay the Order.  This ground is a mere repetition of the first ground and adds nothing.  I am unable to see how this ground has any reasonable prospect of success.

12.  Nor do I consider there is any other reason in the interest of justice as to why the appeal should be heard, given that the question raisedin the first ground of appeal was not the basis of my decision in dismissing the application.

13.  Mr Ernest Koo also submits that without a stay of the Order, the summons to set aside the Order would be rendered nugatory.  This was not a ground advanced in support of R2 – R10’s application for interim interim stay of the Order.  Nor is there any evidence in support of such submission.  Indeed, given that the Order only requires R2 – R10 to hand over the Association’s records and documents to the New Executive Committee and to the Principal Business Address of the Association, all of which are property of the Association, I am unable to see how a refusal to stay execution of the Order would render the summons to set aside the Order nugatory.

14.  For all these reasons, I dismiss R2 – R10’s summons for leave to appeal against the order made on 15 May 2019.  I now hear the parties’ submissions on costs.

(Submissions on costs)

15.  I order R2 – R10 to pay the costs of and occasioned by the summons for leave to appeal on a party to party basis, to be paid forthwith.  I assess the costs of the application for leave to appeal at $45,000.

HCMP 2056/2018

[2019] HKCFI 240

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2056 OF 2018

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D E C I S I O N

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1.  I haver before me a petition dated 20 November 2018 issued by Mr Wong Wah On, a member of the 1^st respondent Tsung Tsin Association Limited, pursuant to section 724 of the Companies Ordinance, Cap 622. The 1^st respondent is a company limited by guarantee and it was formed on 2 May 1959 (“the Company”). Its objects and its purpose are to protect and promote the industrial, commercial and other lawful interests of the Hakka Community in Hong Kong, China and abroad. The 2^nd to 10^th respondents were, it is accepted by the petitioner, properly appointed to the board of the Company. However, it would appear that by 2008, their positions as directors of the Company ended as a result of the provisions of the articles requiring board members to stand for re‑appointment if they wish to continue in office, pursuant to article 68 of the Articles of Association.

2.  It would appear that in recent years, concerns have arisen amongst members of the 1^st respondent concerning the management of the Company and as a consequence, steps were taken by disgruntled members to have an extraordinary general meeting convened at which they could vote on resolutions to reconstitute the board.  This eventually took place, as a consequence of requisitions that were served pursuant to article 25, at an extraordinary general meeting on 22 May 2018 (“the EGM”). 

3.  I am satisfied that the EGM was duly convened in accordance with the Articles of Association of the 1^st respondent; the requisite number of members, namely 50, required by article 15 for a requisition was satisfied; article 16 which governs the service of notices convening an extraordinary general meeting was satisfied; the necessary quorum was present at the EGM; and in the absence of the persons who until that time had been holding themselves out as the chairman and vice chairman of the board (or as it is known in the case of the 1^st respondent its Executive Committee), they were replaced by a duly elected chairman and resolutions reconstituting the board were duly passed on a show of hands.

4.  It would appear that initially, the old board refused to accept that the resolutions passed at the EGM ousted them from office and reconstituted the board.  Disputes arose, and one consequence of that is that the Companies Registry has declined to accept the filing of notices of change of director and change the Company’s records in the Companies Registry without an order of the court.  As a result, the petition was issued.

5.  The petition relies on various grounds for seeking relief.  However, as the relief that is sought only concerns the reconstitution of the board and the consequences of its reconstitution, and, although I am satisfied that all the respondents have been properly served, none of them have attended court to oppose the petition,  it seems to me it is only necessary to focus on the complaint that the 2^nd to 10^th respondents have failed to act properly in accordance with the resolutions passed at the EGM and hand over the books and records of the Company to the new board, and to cease holding themselves out as being the board of the Company.

6.  I find on the basis of the evidence that has been filed in court that the petitioner’s complaint, that there has been unfair prejudice as a consequence of the matters which I have described in the preceding paragraphs, is made out, and this is an appropriate case for the court to make orders for the necessary relief pursuant to sections 724 and 725.

7.  The relief that is sought is contained in the prayer in the petition and is in the following terms:

“(1) a declaration that the Petitioner and other members of the New Executive Committee form the current Executive Committee of the Association;

(2) a declaration that the Petitioner and other members of the New Executive Standing Committee form the current Executive Standing Committee of the Association;

(3) the 2^nd to 10^th Respondents shall, within 14 days, hand over (or cause to be handed over) to the Petitioner (or his appointee(s)) all the corporate records and instruments of the Association including, but not limited to, the statutory records including the register of members and register of directors, corporate seals and stamps, keys (or passcode) to the Principal Business Address, all legal documents including employment and business contracts signed by the Association and title documents of properties and assets and all bank statements.

(4) the 2^nd to 10^th Respondents henceforth shall not hold themselves out as directors/officers/Executive Committee members/agents of the Association or as acting on behalf of the Association in any way whatsoever;

(5) the 2^nd to 10^th Respondents shall, within 14 days, vacate their office space at the Principal Business Address;

(6) costs of this Petition be paid by the 2^nd to 10^th Respondents; or

(7) any other order that the Court thinks fit.”

8.  The order that is sought by Mr Singh, who appeared on behalf of the petitioner today, is in the form of the prayer and I will make an order in the terms of [1] to [5] of the prayer to the petition.  I will order that the 2^nd to 10^th respondents pay the petitioner’s costs of the proceedings.