TSOI CHIK SANG LAWRENCE v. TASTY CATERING GROUP LTD AND OTHERS

HCMP 823/2018

[2021] HKCFI 2749

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS No 823 OF 2018

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D E C I S I O N

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Introduction

1.  On 30 January 2019, this Court ordered, by consent, that the Plaintiff do have leave to wholly discontinue the proceedings and to pay costs to D1 to D4, and D7 to D9 to be taxed if not agreed on a party-to-party basis.

2.  The Plaintiff has settled the costs due to D9.  As for D4, the Plaintiff has agreed to extend the time for commencing taxation pending outcome of the negotiation for settlement and substantive taxation will be held later on this month.

3.  That leaves D1-D3, D7-D8 (collectively “Defendants”) whose time for commencing taxation has expired on 29 January 2021.  They are now applying by summons for extension of time to commence taxation out of time.

4.  The Plaintiff opposes the application saying that there was inexcusable and inordinate delay and that there would be prejudice to the Plaintiff if leave is granted.

5.  At today’s hearing, I have declined to deal with the matter and directed that the summons be dealt with by a taxing master by way of paper disposal. The Plaintiff does not oppose the continuation of the summons in that manner. Here are my reasons for the direction.

Legal principles

6.  A party is not entitled to commence taxation proceedings 2 years after a costs order that came with disposal of an action (“final costs order”) unless extension is granted by the Court: Order 62, rule 22(7) of the Rules of the High Court (“RHC”).

7.  The power to extend the time for commencement of taxation vests in the taxing master and not the judge who made the original costs order.  The taxing master has power to do so even though the application for extension is not made until after expiration of the relevant period: Order 62, rule 16(1)(a) and 16(3) RHC.

Application of the legal principles

8.  In the present case, the margin notes to the Defendant’s summons refer to Order 62, rule 22(7)(b) of RHC and the inherent jurisdiction of the Court.

9.  With respect, neither are helpful. 

(1)  Order 62, rule 22(7)(b) provides, where relevant, that a receiving party is not entitled to commence taxation proceedings after the expiry of 2 years from the final costs order or the extended period granted by the Court.  It does not stipulate where the receiving party should go to obtain the extension of time.

(2)  Order 62 governs the taxation procedure.  The taxing master has power under rule 16 to extend time, and/or to penalize the party in default by, eg denying him costs or interest on costs under rule 22(5).  There is hardly any need to invoke the inherent jurisdiction at all. 

10.  Ms Li, counsel for the Defendants, also relies on the general powers of the Court to extend time and its case management powers under Order 1B, rule 1(2)(a) for the power to extend the time for compliance with any rule or court order.

11.  With respect, if there is a specific provision to govern extension of time in taxation matters, it is not necessary to resort to general powers under Order 1B.  Moreover, a judge only case manages a matter which is within his/her (and not a taxing master’s) jurisdiction.

12.  Ms Li has referred to 2 authorities as to the judge’s powers to extend time, but I am of the view that they do not advance her position:

(1)  In Wing Ming Garment Factory Ltd v Incorporated Owners of Wing Ming Industrial Centre [2012] 1 HKC 290, Recorder Jat SC upheld an order for extension of time to commence taxation under Order 22, rule 16.  The receiving party did apply to the taxing master as the first port of call.

(2)  In China Citic Bank International Ltd v Durrant Simon Patrick Michael[2018] HKCFI 2470, 12 November 2018, §42, DHCJ Joseph Kwan granted extension of time under Order 22, rule 16.  However, the question of whether a judge or taxing master had jurisdiction to entertain the application was not discussed.

13.  The issue in this summons is not difficult.  For the above reasons, I therefore gave the direction that the summons should be dealt with by a taxing master by way of paper disposal.

14.  The hearing time today is attributable to a jurisdiction question which both sides have missed.  I make no order as to costs for the 20 minutes’ hearing time.  Costs of the summons are otherwise reserved to the taxing master.

HCMP 823/2018

[2019] HKCFI 645

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 823 OF 2018

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判 決 書

1.  本案的原訴傳票由原告人提出申請，要求法庭判令，把一個在2018年5月28日的會議（EGM），是關乎公司（即第四被告人）的，及一個2018年5月31日的董事會會議，宣告無效。

2.  2019年1月18日，各方簽署了一份同意傳票，原告人要求法庭批准他終止本案，並且將本席曾經發出的一個禁制令解除。在法庭未曾批准該協議傳票前，鄭鴻杰先生申請加入成為一個介入人，他的傳票最終希望法庭批准他替代原告人蔡植生先生作為原告人，然後使蔡植生先生作為本案的第十被告人。

3.  法庭未批准鄭鴻杰先生的申請前，必須先釐清事實的背景及本原訴傳票申索的項目。原告人以個人或他的公司的名義（公司包括KT）持有公司的32,500股。在2011年2月，據稱這些股份被轉入第一被告Tasty及第二被告Federal的名下，據稱公司在2011年4月或5月期間曾經配股。

4.  在他的支持誓章中，鄭鴻杰先生聲稱他因為有代表原告人、第一、第二、第八、第九被告人而作的謊言及欺詐性錯誤陳述，及第九被告人的一個擔保，以致他簽署了2017年10月24日的一個股東協議。該股東協議導致公司委派一些董事入董事局，亦因而引起一個爭議，導致有董事被解除職責及有新的董事被委任。這些就是原訴傳票所說的EGM議決。

5.  鄭鴻杰先生指稱暫委法官杜溎峰被欺騙，發出2017年11月15日的命令，批准關乎股東協議及董事局成員的安排。在本申請中鄭鴻杰先生期望介入後，法庭批准修改公司的股東名冊以反映真實的股權，並且恢復他作為董事的地位。原告人及所有被告人都反對鄭先生的申請。

法律原則

6.  根據《高等法院規則》第15號命令第6(2)款，在任何訴訟的階段，法庭是可以容許一個人加入成為一方的，即是:

「(b)(i) 任何本應已被加入有關訟案或事宜而成為一方的人，或任何有必要到法庭席前以確保在有關訟案或事宜中的所有有爭議的事宜可有效地及完全地予以裁定及判定的人；或

    (ii)   任何與訟案或事宜的任何一方之間可能存有任何問題或爭論點的人；而該問題或爭論點是由該宗訟案或事宜中所申索的任何濟助或補救所引致、或是與之有關或相關連的，且法庭認為就該問題或爭議點而就該人與該一方之間以及就訟案或事宜的各方之間一併作裁定，是公正及適宜的。」

7.  根據《香港民事訴訟程序2019》第一冊，第15/6/1段，第352頁:

“On whether a new party should be joined, the test is whether there is a bona fide claim and a proper question to be tried as between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the present proceedings. But the court will not give leave for the joinder of parties where to do so would increase rather than prevent a multiplicity of contested proceedings contrary to the purpose of the rule.”

簡單而言，法庭要認為有一個真誠的申索及有一個正當的問題要法庭裁定，而原告人及意願介入的人是適宜作為一方，使他們之間的爭議可得法庭判決的。不過，如果加入一個人是會令到訴訟增加，而不是防止多重訴訟的出現，這是違反第15號命令容許加入訴訟一方的原意的。

分析

8.  首先，法庭看過本案已存檔的協議傳票，該協議傳票的內容看來是適切的。如果法庭批准該協議傳票的話，與訟各方就不再有任何問題或爭論點需要法庭裁斷，所以鄭鴻杰先生並沒有介入的基礎。

9.  第二，即使考慮上文所指的事實背景，如果鄭鴻杰先生所提出的事實是正確，並且構成他申請的基礎的話，法庭有以下的看法：

(a)  他的申請大大超越本原訴傳票的範圍，因為他的申請涉及公司的股權結構及董事會的結構，而這些事情是關乎於EGM之前的情況的；

(b)  涉及不忠實及欺詐性的誤導性言詞，不應該以原訴傳票方式提起訴訟或延續訴訟，因為明顯地，雙方之間必定有關於事實方面的爭訟，是需要用傳訊令狀的方式及審訊方式處理的；

(c)  鄭鴻杰先生所提到涉及股權的爭議，是合併案件HCA 1130及1137/2011所涵蓋的範圍，而該案正在進行中。換言之，鄭鴻杰先生可循另外一宗案件或者其他途徑去追討他認為可得的法律權益。若果他加入本案，只會增加而不是防止多重訴訟，違反上文所說的法律原則；

(d)  除了本案的第一、第二及第四被告人，本案的其他與訟者並非合併案件的與訟方，所以他們不應該被捲入該訴訟中。即使鄭鴻杰先生加入本訴訟成為一方，法庭在本訴訟的裁定將不能約束合併案件中的某些與訟方，所以鄭鴻杰先生所提起關乎股權結構及董事會結構的爭議，並不能在本訴訟中得以完全及圓滿地處理。更甚者，他的介入，不會加速處理他在合併案件中所申索的權益，亦不能節省法律費用；

(e)  本原訴傳票是基於各方協議下，由原告人蔡植生先生撤回申請的，因此法庭未就本案的是非曲直作過任何決定。如果鄭鴻杰先生認為他有任何權益是涉及本原訴傳票的範圍的，他是可以循法律途徑在另一些案件追討，因本案而引起一事不兩審的情況，並不會出現；

(f)  除非鄭鴻杰先生在合併案件中被獲判他是公司的股東，他是沒有身分去行使股東的權益的。第15號命令第6款不會容許一個沒有身分的訴訟者變為有身分：《香港民事訴訟程序2019》第一冊，第15/6/1段，第353頁。

10.  基於上述任何一個理由，鄭鴻杰先生都沒有申請介入的基礎。

11.  鄭先生在他的誓章內，就很多法律代表作出嚴重的指控，(一) 我看不到有基礎；(二) 即使有，與本申請亦無關，因此毋須處理。

12.  本席撤銷鄭先生兩個傳票的申請。至於本案所有與訟人所發出的已簽署的協議傳票，根據內容，應該批准第1段、第2段。第3段沒有需要，第4段批准，第5段關於訟費也批准，不過本席現在處理今天聆訊的堂費。

（法官與雙方討論有關訟費申請事宜）

13.  本席接受各位大律師對法庭的陳詞，很明顯地，他們的陳詞顯示，在今天聆訊之前，與訟各方曾經很努力地避免今天的聆訊，希望鄭先生能夠撤回他的申請。這一種態度顯示與訟各方符合法律的要求，彼此合作，減低法庭的工作及聆訊時間。本席亦特別多謝大律師通知法庭，那些給他們的聘書是在法庭發出了1月23日的信件請鄭先生考慮是否進行本傳票申請之後才發給幾位大律師的。

14.  鄭先生的誓章很長，有五百多頁，負責任的律師是需要閱讀他的誓章的內容的。本席今天所收到的簡短的陳詞，顯示幾位大律師是很用心將那個申請的核心問題提出有用的陳詞來協助法庭。因此本席認為在這基礎下，鄭先生意決進行他的傳票，他應該負這個後果的責任。

15.  各與訟人所得的訟費，由法庭發出1月23日的信件後，原則上是應該以彌償基準計算。不過法庭認為與訟人沒有在今天聆訊前連同書面陳詞，將訟費陳述書交給法庭及鄭先生，是對鄭先生不公平的，亦是浪費法庭等候的時間，由於這種做法不符合實務指示的要求，因此法庭會在批准的律師費方面反映法庭對這一種行為的責備。

16.  綜觀幾套訟費，本席亦考慮到李燕婷大律師代表出席公司，原則上公司當然沒有需要參與，只需要受法庭的命令約束便可。但李大律師指出了很重要的一點，就是若果法庭容許鄭先生介入的時候，公司的利益是會受影響的，因為公司的銀行戶口可能會被凍結。本席接受她的陳詞，公司今天的出席是應該的，亦關乎公司切身的利益。

17.  考慮了整體的情況下，本席批予原告人的訟費為75,000元；第一至第三、第七、第八被告人：80,000元；第四被告人，即公司：40,000元；第九被告人：55,000元，由鄭鴻杰先生支付。

HCMP 823/2018

[2019] HKCFI 82

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS No 823 OF 2018

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D E C I S I O N

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1.  I have two summonses before me: the Conversion Summons and the Injunction Summons.

2.  The present proceedings were commenced on 1 June 2018 by way of Originating Summons to determine the question of the validity of a general meeting of D4 (“the Company”) held on 28 May 2018 (“EGM”) and consequential reliefs should the EGM be found invalid.

3.  After commencement of the OS, the plaintiff filed challenges to the Companies Registry and the Bank of China (Hong Kong) Limited (“BOC”), relying on the present disputes.  As a result of the plaintiff’s complaints, the Companies Registry refused to register the forms submitted for recording the change in constitution of the board as per the resolutions passed at the EGM.  The Companies Registry has also put down a note to alert the public as to the dispute over directorship.

4.  Although the originating summons did not seek an injunction, the BOC accounts have been frozen and remain in the status of “debit not allowed” pending resolution of the OS.  The Company cannot utilise the funds in the BOC accounts and has to resort to shareholders’ loan in order to meet its business obligations.

5.  The plaintiff took out the Conversion Summons, alleging that, as disclosed from the affirmations filed, there were disputes of facts which warranted the conversion of the OS into a writ action. 

6.  The Company, on the other hand, took out the Injunction Summons so as to reactivate the BOC accounts.

The Conversion Summons

7.  The plaintiff’s solicitors are still on record as of today, although an application for them to cease to act is due to be heard on 23 November 2018.  The plaintiff is personally absent and he seeks an adjournment by letter until he comes back on 13 November 2018.  As of today, no position has been put forward by the plaintiff in support of the conversion summons.

8.  I see no valid reason to adjourn the conversion summons, which was taken out on 27 September 2018.  There has been ample time for the plaintiff to prepare for today’s hearing.  Any last-minute disagreement between the plaintiff and his own solicitors is not a reason to adjourn the present application.  I therefore proceed in the absence of any substantive arguments from the plaintiff’s side.

9.  No supporting affirmation has been filed by the plaintiff.  I can only decide the summons on the basis of the materials before me.

10.  The hearing of the originating summons has been fixed for 30 January 2019, ie in two months’ time.  This is a milestone date that should not be moved, except for good reasons.

11.  One can only have a glimpse of the plaintiff’s possible reasons in support and they have been helpfully set out in the affirmations of counsel for the defendants.  I will adopt the summary of Miss Joyce Leung and Miss Winnie Li for the Company.

12.  The issues of the originating summons are:

(1)  whether proper notice was given by the requistionists to the Company to requisition for a general meeting to consider the removal of directors;

(2)  whether the relevant procedures in sections 462, 566, 568 and 574 of the Companies Ordinance, Cap 622 (“the Ordinance”), had been complied with for convening the EGM;

(3)  whether the disputed status of Tasty (D1) and Federal (D2) as the Company’s shareholders would have affected their rights to requisition for the EGM and to vote therein.

13.  The scope of the OS is therefore very narrow.

14.  The grounds for challenging the validity of the EGM are confined to those in paragraphs 74 and 83 of the plaintiff’s affirmation.  Again, counsel had very ably summarised them into three matters: (1) lack of requisition notices and special notices under the Ordinance; (2) lack of registration of allotment of shares to D1; and (3) ownership of shares held by D1 and D2 is subject to challenge in other proceedings.

15.  The plaintiff and defendants have so far set out in the affidavits their respective evidence on the giving of notices and requisitions.  As regards the issue of whether or not there was lack of requisition notice and special notices, that is a question of law.

16.  The second and third issues as to registration of allotment of shares and ownership of shares being subject to challenge are also issues of law rather than of facts.

17.  The plaintiff has not made any submission as to how further exchange of pleadings, discovery, witness statements will further advance each party’s case and what advantage that will bring.

18.  In the premises, I see no reason why the originating summons procedure should be converted into a writ action.

19.  Incidental to this summons, the plaintiff has asked for directionsthat, if the summons is dismissed, the plaintiff do have leave to file and serve his affirmations in reply in the originating summons proceedings within 28 days of the date of such dismissal.

20.  Again, I am unable to see why the court should entertain this request.  This is a late application for conversion. There are no good reasons to affect the milestone date.  There has already been one extension of time for the plaintiff to file and serve its affirmation in reply by 27 September. There is no explanation by the plaintiff as to why he needs further time.

21.  The defendants have reasonably made a suggestion that there be an extension of 14 days, but on an unless order basis.  This, in my view, is a more than generous offer.

22.  Accordingly, I dismiss the conversion summons and make an order that unless the plaintiff shall file and serve his affirmation in reply by 4 pm on 26 November 2018, he shall be barred from doing so.

23.  Costs of the conversion summons should be to the defendants.

The Injunction Summons

24.  D4 seeks an interim injunction so as to reactivate its BOC account in order to meet its financial obligations.  The summons was taken out on 6 November 2018.  Today is the first call-over.  Although the plaintiff appears by solicitors still on record, no case has been put forward nor has any affidavit been filed.

25.  I am told that there is no dispute amongst the defendants as regards the application taken out by the Company and so the summons was not served on those defendants.

26.  The only dispute is between the plaintiff and the Company.  The dispute is narrow.  What the plaintiff is seeking is an interim measure. 

27.  As I have indicated, today is the first call-over.  The plaintiff should be given a chance to respond by way of affidavit and arguments, and there will be a return date on 21 November 2018 at 10 am. However, interim measures ought to be put in place if deemed appropriate, so that the Company can function.

28.  In this respect, for injunctions of this kind, the relevant legal principles are those set out in Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041.  The applicant must show that there are serious issues to be tried, the balance of convenience lies in favour of granting the injunction sought and that damages are not adequate remedy.  The court should take whatever course that appears to carry the lower risk of injustice, if it should turn out that it is wrong.

29.  It is evident from the affidavits filed and the correspondence that there are serious issues to be tried as to the validity of the resolutions of the EGM.  It appears that the plaintiff does not dispute that there are such serious issues in the correspondence or in its position taken so far.

30.  The bank account being frozen, it would affect the bank’s obligations to its customers, suppliers and even employees, and it may bring about damage to the Company, and the balance of convenience lies in favour of some measures to be taken in the interim.

31.  Damage to the Company may be more than what damages can remedy.  By way of example, it can damage the business reputation and, if the Company cannot meet its obligations in terms of payment of employees’ salary, that may even end the Company up in criminal sanctions.

32.  Miss Leung has ably in her submission summarised the stance taken by the plaintiff.  The plaintiff does not in principle object to the reactivation of the BOC account. The only thing is the mechanism and that is divided into four limbs:

(1)  The Company considers that the plaintiff should be informed and be asked to sign the relevant cheques if the amount is over $100,000, but the plaintiff wants it to be $50,000.

(2)  The plaintiff does not want Ricky Wong to be one of the authorised signatories but no explanation has been given.  Presumably it is because he objects to the appointment of Ricky Wong.

(3)  The plaintiff does not want to authorise salary payments to three employees who he thinks should be fired.  That dispute with those employees is the subject of proceedings in HCMP 478/2018, in turn relating to the board meeting in March 2018 of the Company.  That set of proceedings has been stayed pending determination of the present proceedings.

(4)  The plaintiff agrees to sign cheques relating to major transactions of the Company but he would not undertake to sign within specified or short time periods.

33.  Dealing with these objections of the plaintiff one by one, as regards the first objection, as the interim measure the court is going to take will cover a period of less than seven days, I am inclined to go for the greater figure suggested by the defendants, ie that only in relation to cheques of more than $100,000 would the mechanism imposed by the court as an interim measure apply.

34.  As regards the second objection, although the plaintiff has not given any explanation as to why he did not want Ricky Wong to be one of the authorised signatories, however, in the proposal given by the Company, Ricky Wong is one of the signatories in the group A.  Another signatory’s approval is required before a cheque can be issued.  There is thus check and balance provided by the Company to ensure that Ricky Wong will not abuse his position.

35.  As to the third objection, pending dismissal of employees, the Company has obligations towards them.  If the Company does not pay these employees, there may be criminal sanctions under the Employment Ordinance.

36.  On balance, it is important for the Company to keep its obligations towards the employees in the interim pending resolution of this originating summons.  If it is found that these employees were wrongly retained or had committed any misconduct that they should have been fired, there may be possibility of seeking recovery from the employees later on.  After all, the originating summons will be heard in January 2019 and one is talking about obligations towards employees in the next two or three months only.  The balance of convenience plainly is for the Company to meet those obligations.

37.  As to the fourth objection, it is important in order to keep the business smoothly running that the plaintiff should be asked to sign the relevant cheques within specified timeframes.

38.  Having considered the four grounds of objections by the plaintiffdisclosed in correspondence, I am of the view that they are not strong enough to displace the need for the smooth operation of the bank accounts in the meantime from now until the next return date on 21 November.

39.  Applying Music Advance, it is appropriate for the court to grant the interim measures sought by the defendants.

40.  I have gone through the draft order in the course of discussion with counsel this morning and they appear to me to be appropriate measures to be given.  I therefore give an order in terms along the lines suggested by Miss Joyce Leung in her draft order, subject to the amendments I have made.