HCA 1227/2022
[2026] HKCFI 695
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1227 OF 2022
_______________________
BETWEEN
| Chin Choon Onn and Jong Yat Kit,
Committee of the Estate of Ng Kwai Sim (伍桂嬋),
a mentally incapacitated person (pursuant to the Order of Hon Lok J made on 18 July 2022 under Part II of the Mental Health Ordinance, Cap. 136) | Plaintiff |
| and | |
| Lai Sum Hung (黎森熊) | 1st Defendant |
| Far Trillion Limited (遠兆有限公司) | 2nd Defendant |
| Ng Siu On (伍兆安) | 3rd Defendant |
| Wang Fat Land Investment Company Limited
(宏發置業有限公司) | 4th Defendant |
______________________
| Before: | Deputy High Court Judge Alan Kwong in Chambers (Open to Public) |
| Date of Hearings: | 28 January 2026 |
| Date of Decision: | 28 January 2026 |
______________________
DECISION
______________________
A. Introduction
1. There are 2 applications before the court.
2. By summons dated 8 July 2025 (the “O14 Application”), the Plaintiff, ie the committee (the “Committee”) of the estate of madam Ng Kwai Sim (“Madam Ng”), seeks summary judgment for declarations that:-
(1) The 1st Defendant, namely Lai Sum Hong (“Mr Lai”), was never validly appointed as a director of the 4th Defendant (the “Company”);
(2) The purported allotments of shares by the Company on 10 January 2022 and 8 July 2022 (the “1st and 2nd Purported Allotments”) were void and invalid; and
(3) The purported amendment of the Company’s articles of association on 28 March 2022 was void and/or invalid (the “Purported Amendment of Articles”).
3. The Committee also took out a summons dated 8 July 2025 seeking to vary the interlocutory injunction order (the “Interlocutory Injunction Order”) granted by DHCJ Herbert Au-Yeung (as he then was) on 21 September 2022 (and continued by Cheng J on 30 September 2022). The Committee seeks to impose a spending limit on the expenses for the ordinary course of business of the Company (the “Injunction Variation Application”).
B. Material Background
B1 Madam Ng and the Company
4. Madam Ng is now 96 years old.
5. It is not in dispute that prior to the 1st Purported Allotment on 10 January 2022:-
(1) Madam Ng owned 99.96% shareholding (or 222,900 shares) in the Company.
(2) The other shareholder of the Company was the 3rd Defendant, namely Mr Ng Siu On (“NSO”), who is Madam Ng’s nephew. He owned 0.04% shareholding (or 100 shares) in the Company.
(3) Madam Ng and NSO were the only directors of the Company.
6. The Company owns a substantial number of properties, and these properties have been generating substantial income.
7. Whilst it has been suggested that Madam Ng’s mental capacity had deteriorated since June 2021, it is not in dispute that in August 2021 Madam suffered an accident during which she hit her head. As a result, a brain operation took place in September 2021.
8. In March 2022, two qualified psychiatrists certified that Madam Ng no longer had mental capacity.
9. In the circumstances, on 18 July 2022, the Committee was appointed.
B2 Mr Lai
10. Mr Lai is a former tenant of Madam Ng. He is also a renovation contractor, who was engaged by Madam Ng to carry out renovation works on properties owned by the Company as well as properties registered in Madam Ng’s own name.
11. According to Mr Lai, she had a close friendship with Madam Ng. Apart from carrying out renovation works for Madam Ng and/or the Company, he also assisted Madam Ng in business matters (such as chasing outstanding rental from tenants) and personal matters (such as employing domestic helpers).
B3 The Disputed Corporate Acts
12. The disputes in this action concern the following corporate acts on the part of the Company. It would be helpful to set out the relevant events in chronological order:-
(1) On 31 August 2021, a purported extraordinary general meeting of the Company took place (the “EGM dated 31 August 2021”). There, it was resolved that (i) Mr Lai be appointed as a director of the Company; and (ii) the board of directors be authorized to allot 233,000 shares to Mr Lai[1].
(2) According to the records of the Companies Registry, on 15 November 2021, whilst Madam Ng resigned as a director of the Company, Mr Lai was appointed as a director of the Company. In this connection, there is a written resolution signed by Madam Ng and NSO on 13 November 2021 recording the changes.
(3) On 10 January 2022, the 1st Purported Allotment took place. 233,000 shares in the Company were allotted in favour of Mr Lai. After the 1st Purported Allotment took place, the shareholding in the Company was as follows:-
| Madam Ng | 48.88% shareholding
(229,000 shares) |
| NSO | 0.02% shareholding
(100 shares) |
| Mr Lai | 51.1% shareholding
(233,000 shares) |
(4) On 28 March 2022, the Purported Amendment of Articles took place. According to a certificate filed with the Companies Registry, the Company passed a shareholders’ resolution dated 28 March 2022. The following articles in the original articles of association of the Company (the “Original Articles of Association”) were removed:-
(a) Article 9:-
“The qualification for a Director shall be the holding in his own right of at least 100 fully paid shares in the Company” (the “Qualification Requirement”).
(b) Article 10(d):-
“The office of a Director shall be vacated if the Director… (d) ceases to hold the number of shares required to qualify him for office.”
(5) On 13 April 2022, Madam Ng resigned as company secretary, and she was replaced by one Ling Yuen Heung (“Ms Ling”).
(6) On 25 April 2022, NSO also resigned as director, and he was replaced by Ms Ling.
(7) On 8 July 2022, the 2nd Allotment took place. The effect of the 2nd Allotment was such that (i) 2,097,000 shares were allotted to Mr Lai; (ii) 2,006,100 shares were allotted to the 2nd Defendant, namely Far Trillion Ltd (“Far Trillion”); and (iii) 900 shares were allotted to NSO. In the circumstances, after the 2nd Allotment, the shareholding in the Company has been as follows:-
| Madam Ng | 4.89% shareholding
(229,000 shares) |
| NSO | 0.02% shareholding
(1,000 shares) |
| Mr Lai | 51.1% shareholding
(2,330,000 shares) |
| Far Trillion | 43.99% shareholding
(2,006,100 shares) |
(8) On 1 August 2022, Ms Ling resigned as director. Thus, Mr Lai has become the sole director of the Company.
B4 These Proceedings
The Interlocutory Injunction Order
13. Upon commencing the present action, on 21 September 2022, the Committee took out an ex parte application before DHCJ Herbert Au-Yeung (as he then was), and the learned Judge granted the Interlocutory Injunction Order. Mr Lai and the Company have been restrained from disposing of or diminishing the value of the rental income arising from the Company’s properties. However, Mr Lai and the Company have not been prohibited from dealing with such rental income in the ordinary and proper course of business of the Company.
14. On 30 September 2022, Cheng J continued the said Interlocutory Injunction Order.
The Parties’ Cases
15. The factual case of the Committee is straightforward.
(1) Madam Ng had lost mental capacity as of September 2021.
(2) Mr Lai was merely Madam Ng’s renovation contractor and tenant. As such, the exercises under the EGM dated 31 August 2021, the Amendment of Articles on 28 March 2022, and the 1st and 2nd Purported Allotments on 10 January 2022 and 8 July 2022 were not commercially explicable and/or justifiable.
(3) There is an inference that in procuring the aforesaid corporate acts of the Company, Mr Lai had taken advantage of Madam Ng’s lack of mental capacity and/or made misrepresentations to her.
16. NSO admitted and supported the claims brought by the Committee.
17. Mr Lai and the Company have respectively filed a defence in these proceedings. Their factual case can be summarized as follows:-
(1) Madam Ng was not mentally incapacitated until May 2022.
(2) Mr Lai and Madam Ng had a close friendship, and Madam Ng was concerned that her relatives (including Mr Rick Ng and NSO) would send her to an elderly home.
(3) In the circumstances, in July 2021, Madam Ng and Mr Lai entered into an oral agreement whereby in exchange for Mr Lai’s promise of taking care of her well-being for the rest of her life, Madam Ng would allot shares in the Company in favour of Mr Lai and appoint him as a director (the “Alleged Oral Agreement”).
(4) Pursuant to the Alleged Oral Agreement, the EGM dated 31 August 2021 and the 1st Purported Allotment took place. Whilst Mr Lai was validly appointed as the Company’s director, the 233,000 shares in the Company were validly allotted in favour of Mr Lai.
(5) As regards the 2nd Purported Allotment, Mr Lai asserted that he discovered that the funds of the Company had been misappropriated by NSO. Pursuant to some negotiation that involved himself, Mr Rick Ng, and NSO, it was decided that shares in the Company would be allotted to a corporate vehicle used by Mr Rick Ng and NSO (ie Far Trillion) upon payment of an aggregate sum of HK$21,300,000. However, Mr Ricky Ng and NSO were unable to pay a sum of HK$21,300,000 pursuant to the parties’ agreement. Thus, the ownership in Far Trillion had not been transferred to them.
18. Although Far Trillion has not filed a defence, it shared legal representation with Mr Lai and the Company. As such, Far Trillion adopted the same position as Mr Lai and the Company.
C. The O.14 Application
C1. Legal Principles
19. In Guanghua SS Holdings Limited v Lim Yew Cheng & Another[2022] HKCFI 1052 at para 13, Peter Ng J set out a helpful and succinct summary of the proper approach to applications for summary judgment:-
(1) The order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary.
(2) The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, justify granting leave to defend.
(3) The burden is on the defendant to show a real or bona fide defence or some other reason for a trial. The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence.
(4) In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the court must look at the whole situation.
(5) In assessing the credibility of the defendant’s factual case, while the court will not embark upon a mini-trial on affidavit evidence, the court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate.
(6) If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the court must say so.
(7) If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.
20. It is obvious that this court is not in a position to resolve the underlying factual disputes between the parties on affidavits, such as whether Madam Ng had a very close relationship with the Mr Lai and whether the Alleged Oral Agreement existed.
21. In their submissions, Mr Bernard Man SC, leading Mr Keith Lam, (for the Committee) sensibly did not ask me to resolve these underlying factual disputes. Instead, their focus was on the validity of the relevant corporate acts on the part of the Company in relation to the EGM dated 31 August 2021, the Purported Amendment of Articles, and the 1st and 2nd Purported Allotments.
C2. Purported Appointment of Mr Lai as Director of the Company
22. It is Mr Lai and the Company’s case that:-
(1) At the purported EGM dated 31 August 2021, Mr Lai was appointed as the Company’s director.
(2) Alternatively, pursuant to the purported shareholders’ resolution dated 13 November 2021, Mr Lai was appointed as the Company’s director on 13 November 2021.
23. Mr Man was correct in pointing out that:-
(1) As of 31 August 2021 and/or 13 November 2021, the Purported Amendment of Articles had not yet taken place, and under articles 9 and 10 of the Company’s Original Articles of Association, the Qualification Requirement was applicable, in that only a shareholder who held at least 100 fully paid shares in the Company was qualified to become a director of the Company. As mentioned, the Purported Amendment of Articles only took place subsequently on 28 March 2022.
(2) As of 31 August 2021 and/or 13 November 2021, Mr Lai had not yet become a purported shareholder or member of the Company. As mentioned, the 1st and 2nd Purported Allotments (pursuant to which Mr Lai acquired 233,000 shares and 2,097,000 shares in the Company) only took place subsequently on 10 January 2022 and 8 July 2022.
(3) The shares acquired by Mr Lai under the 1st and 2nd Purported Allotments were not paid up as of 8 July 2022. According to the returns of allotment filed with the Companies Registry, the total share capital of the Company had remained the same as of the time when the 2nd Purported Allotment took place on 8 July 2022. In this connection, it is Mr Lai and the Company’s case that the new shares were only paid up in August 2022.
24. In the premises, it is clear that as of 31 August 2021 and/or 13 November 2021, due to the Qualification Requirement under the Company’s Original Articles of Association, Mr Lai was not qualified to be appointed as a director of the Company. He had not yet become a shareholder/member of the Company and not yet fully paid up at least 100 shares in the Company.
25. Mr Oscar Tam, together with Ms Agnes So, (for Mr Lai, Far Trillion, and the Company) sought to rely on the Duomatic principle at common law. They contended that despite the Qualification Requirement and the fact that Mr Lai was not a shareholder/member, Madam Ng and NSO were contented that Mr Lai be appointed as the Company’s director. As such, the Qualification Requirement must have been informally waived or implicitly removed from the Company’s Original Articles of Association at the time when the EGM dated 31 August 2021 took place and/or at the time when the shareholders’ resolution was passed on 13 November 2021.
26. In Re Duomatic Ltd [1969] 2 Ch 365 at 373, Buckley J stated:-
“[W]here it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be.”
27. In order for a shareholder to “assent” to a matter, it is necessary for him or her to have knowledge in respect thereof. In this connection, in EIC Services Ltd v Phipps [2003] BCC 931 at para 135, Neuberger J (as he then was) stated:-
“…the shareholders who are said to have assented or waived must have the appropriate or “full” knowledge. If a shareholder is not even aware that his “assent” is being sought to the matter, let alone that the obtaining of his consent is at least a significant factor in relation to the matter, he cannot, in my view, have the necessary “full knowledge” to enable him to “assent”, quite apart from the fact that I do not think he can be said to “assent” to the matter if he is merely told of it.” (emphasis added)
28. In the premises, in determining whether the Duomatic principle is engaged, the question is whether it can be shown that Madam Ng and NSO knew about the Qualification Requirement. If Madam Ng and NSO did not know about the Qualification Requirement, they could not have been in a position to waive or remove the same.
29. In my view, had Madam Ng and NSO known or appreciated that the Qualification Requirement existed, what they would have done was to cause the Company to transfer or allot shares in favour of Mr Lai before they took steps to cause Mr Lai to be appointed as a director. This was the easiest and most convenient way to satisfy the Qualification Requirement. Bearing in mind that the threshold (ie 100 shares (which was equivalent to 0.04% shareholding)) was extremely low, there was no reason why this was not done. It could not be the case that Madam Ng and NSO desired to flout the provisions in the Company’s articles. The only plausible explanation was that Madam Ng and NSO were not even aware of the Qualification Requirement at all, and this was why no steps were taken to ensure that the same was complied with (when this could have been done easily).
30. Indeed, Mr Lai, Far Trillion and the Company, who carry the burden of raising an arguable defence or a triable issue, have failed to adduce a shred of objective evidence to support the bare assertion that Madam Ng and NSO were aware of the Qualification Requirement. This bare assertion is not consistent with the objective circumstances canvassed hereinabove.
31. In his submissions, Mr Tam contended that the minutes in respect of the EGM dated 21 August 2021 show that it was Madam Ng and NSO’s intention to render Mr Lai a shareholder so that he could manage the Company. In my view, the minutes simply do not show that Madam Ng and NSO had knowledge of the Qualification Requirement. As discussed, had Madam Ng and NSO been aware of the existence of the Qualification Requirement, what they would have done was to transfer or allot shares in favour of Mr Lai before they took steps to cause Mr Lai to be appointed as a director.
32. It appears to me that Mr Tam’s contention was tantamount to suggesting that whenever a company’s articles contain some requirements that obstruct the shareholders from achieving their objectives, the shareholders must have necessarily intended that such requirements be waived or removed. This cannot be correct. It depends on the factual circumstances.
33. As pointed out by Mr Man, the mere fact that Madam Ng and NSO were the Company’s shareholders does not necessarily mean that they knew about the existence of the Qualification Requirement. I accept Mr Man’s submissions. In the absence of any meaningful evidence, the court cannot simply assume (i) that a company’s shareholders are always familiar with the requirements under the company’s articles or (ii) that whenever a requirement under a company’s articles is not complied with, the shareholders necessarily intend that the same be waived. Depending on the circumstances of the case, this is often a matter of inference. In the present case, I am not of the view that there is evidential basis on which to infer that Madam Ng and NSO knew about the existence of the Qualification Requirement and that they intended that the same be waived or removed.
34. For the above reasons, I conclude that the purported appointment of Mr Ng as the Company’s director was void and invalid.
C3. The 1st Purported Allotment
35. The 1st Purported Allotment was effected by a board resolution that was passed at the Company’s purported board meeting that took place on 10 January 2022 (the “Board Meeting dated 10 January 2022”). There, NSO and Mr Lai, as purported directors, resolved that 233,000 shares in the Company be allotted to Mr Lai.
36. On the same day (ie 10 January 2022), a purported extraordinary general meeting also took place (the “EGM dated 10 January 2022”). There, Madam Ng and NSO, as shareholders of the Company, resolved to grant a general mandate to the Company’s directors to issue new shares.
37. When the minutes in respect of the Board Meeting dated 10 January 2022 and the minutes in respect of the EGM dated 10 January 2022 are read together, it is apparent that the shareholders merely authorized the directors to issue the new shares, and the allotment should be carried out by the directors.
38. The Committee’s contention is straightforward. Mr Man pointed out that:-
(1) As stated in article 12 of the Company’s Original Articles of Association, the quorum of a directors’ meeting shall be two.
(2) As evidenced by the minutes, the 2 directors who attended the Board Meeting dated 10 January 2022 were NSO and Mr Lai.
(3) At the time when the Board Meeting dated 10 January 2022 took place, Mr Lai did not hold any shares in the Company, and he was not qualified to be appointed as a director due to the Qualification Requirement (see section C2 above).
(4) Therefore, the Board Meeting dated 10 January 2022 was inquorate. It follows that the 1st Purported Allotment (which was approved at this Board Meeting) was invalid.
39. Mr Tam sought to rely on the irregularity principle at common law.
40. In Peter Yip v Asian Eletronics Ltd [1998] 2 HKC 96, 102I, Le Pichon J (as she then was) stated:-
“The irregularity principle really comes to this: the lawfulness of a decision taken by a meeting of members or board cannot be questioned if the only facts alleged to make it unlawful is a mere informality and irregularity and the intention of the meeting is clear. This is particularly so if there is no evidence that the decision of the meeting would have been different if the correct procedure had been observed.”
41. In Chen Pao Tzu v Chen Sheng Kuei [2021] 1 HKLRD 1071 at paras 19 and 21, Linda Chan J stated:-
“19. In my judgment, the counterfactual posited by D1 is not the correct one. As the authorities explain, the Court does not simply look to ascertain whether the result of the resolution was one which the majority shareholders would approve of. Rather, it considers whether the same result would have obtained had the correct procedure been followed (Re Dalny Estates, §18 per G Lam J). There is thus an implicit requirement that the irregularity was one which could have been cured by the majority. In other words, the principle does not operate to validate a resolution which the majority shareholders could not have lawfully passed.” (emphasis added)
“21. As Mr Lung accepts in his oral submissions, the burden is on the party seeking to rely on the “irregularity principle” to demonstrate that the principle applies, and the threshold is one of inevitability.” (emphasis added)
42. In Qureshi v Association of Conservative Clubs Ltd [2019] EWHC 1165 at para 57 (which was applied by Recorder Anthony Houghton SC in Re Pacific Bulk Lines Co Ltd[2020] HKCFI 1690 at para 53), Deputy Judge Sarah Worthington QC stated:-
“…the rigor of the ‘inevitability’ condition is important: the facts must demonstrate that the same ends would inevitably be achieved. ”
43. For the following reasons, I am not of the view that the irregularity principle would avail Mr Lai, Far Trillion, and the Company.
44. As pointed out by Linda Chan J in Chen Pao Tzu at para 19, there is a requirement that the irregularity was one which could have been cured by the majority.
45. Whilst Mr Tam emphasized that the intention of the shareholders (ie Madam Ng and NSO) was to allot shares in favour of Mr Lai, it is important not to lose sight of the fact that at the EGM dated 10 January 2022 (see paras 35 to 37 above), what was resolved was that a general mandate be granted to the Company’s directors to issue new shares.
46. In the premises, the question to ask is whether the Company’s board of directors was capable of curing the irregularity in relation to the quorum requirement. In my view, the answer is in the negative.
47. Under article 6 of the Company’s Original Articles of Association, “the number of Directors shall be not be less than two or more than seven”[2]. This is consistent with article 12, which provides that “the quorum of a Directors’ Meeting shall be two”[3].
48. As pointed out: -
(1) As of the time when the EGM dated 10 January 2022 and Board Meeting dated 10 January 2022 took place, Madam Ng had already resigned as director. This happened as early as 15 November 2021: see para 12(2) above
(2) For the reasons canvassed in section C1 above, although Mr Lai was purportedly appointed as the Company’s director on 31 August 2021 and/or 13 November 2021, the purported appointment was invalid due to the Qualification Requirement.
49. In the circumstances, as of the time when the EGM dated 10 January 2022 and Board Meeting dated 10 January 2022 took place, the Company only had 1 director, ie NSO. This violated the requirement under article 6 of the Company’s Original Articles of Association, which provides that there shall be at least 2 directors.
50. As a single director, NSO was incapable of constituting the Company’s board of directors and/or convening any valid board meeting. It cannot even be said that there was a majority at all. What the Company needed to do at the time was to validly appoint an additional director. This did not happen.
51. I cannot see how it can be said that the majority of the Company’s board of directors could have cured the irregularity when the Company’s board of directors was not even properly constituted at all in accordance with the Company’s Original Articles of Association. Obviously, the majority of the Company’s board of directors could only have cured the irregularity if and only if it was properly constituted in the first place.
52. By the same token, I also cannot see how it can be said that the ‘inevitability’ condition is satisfied: see Qureshi at para 57. As the Company did not have 2 directors, the Company was not even in a position to convene a board meeting.
53. For the above reasons, I conclude that the irregularity principle is not engaged.
54. I also conclude that:-
(1) The Board Meeting dated 10 January 2022 was inquorate.
(2) The 1st Allotment (which was approved at the said Board Meeting) was void and invalid.
C4. Purported Amendment of Articles
55. It is Mr Lai, Far Trillion, and the Company’s case that the Purported Amendment of Articles was effected by virtue of a shareholders’ resolution signed by Madam Ng and NSO on 28 March 2022 (the “Shareholders’ Resolution dated 28 March 2022”).
56. However, Mr Lai, Far Trillion, and the Company have failed to produce the said Shareholders’ Resolution dated 28 March 2022. They only rely on a certificate signed by Mr Lai (but not Madam Ng and NSO) on 28 March 2022 (the “Certificate dated 28 March 2022”).
57. In this connection, I do not accept Mr Lai’s bare assertion that the said Shareholders’ Resolution dated 28 March 2022 existed, but could not be located. This bare assertion is not corroborated by any objective evidence and is inconsistent with the objective circumstances.
58. Indeed, the Shareholders Resolution dated 28 March 2022 and the Certificate dated 28 March 2022 were created on the same day and for the same purposes. There is no credible explanation as to why Mr Lai was able to put forward the Certificate dated 28 March 2022 (which was signed by himself), but not the Shareholders’ Resolution dated 28 March 2022 (which was signed by Madam Ng and NSO).
59. Furthermore, it appears incontrovertible that as of 28 March 2022, Madam Ng had already become mentally incapacitated. In this connection:-
(1) On 3 March 2022, Madam Ng was examined by 2 psychiatrists (including Dr Gabriel Hung). They certified that Madam Ng was mentally incapacitated.
(2) Mr Lai and the Company engaged Dr Chong to express opinion on Madam Ng’s mental capacity. Dr Chong was specifically asked to address the issue of Madam Ng’s mental capacity after 4 March 2022. To this end, Dr Chong was provided with, inter alios, a copy of Dr Gabriel Hung’s report as well as the pleadings and witness statements filed by the parties (including those filed by Mr Lai).
(3) However, Dr Chong was unable to opine that Madam Ng still had mental capacity after 4 March 2022. In paragraph 31 of his report, Dr Chong even stated that “Vascular Dementia is characterized by its stepwise deterioration in nature, it is therefore possible that [Madam Ng] was mental[ly] capable in January 2022 and found to be mentally incapacitated when assessed by two psychiatrists on 4 March 2022.”
60. Having considered all the relevant circumstances, I am not of the view that Mr Lai, Far Trillion, and the Company have shown an arguable case that the Shareholders’ Resolution dated 28 March 2022 existed, and that the Purported Amendment of Articles had been approved by the Company’s shareholders (including Madame Ng, who no longer had mental capacity at the time).
61. In the premises, I conclude that the Purported Amendment of Articles on 28 March 2022 was void and invalid.
C5. The 2nd Purported Allotment
62. As pointed out by Mr Man, Mr Lai, Far Trillion, and the Company had not produced any written resolution passed by the Company’s shareholders or directors to illustrate how the 2nd Allotment was effectuated. In the absence of any corporate act on the part of the Company, I am unable to see how the 2nd Purported Allotment could be valid.
63. Mr Lai, Far Trillion, and the Company appear to suggest that there was somehow an assent by all the shareholders of the Company. There are no merits in this vague suggestion at all.
64. The 2nd Purported Allotment took place on 8 July 2022.
65. As pointed out hereinabove in paragraph 56:-
(1) The medical evidence from the 2 psychiatrists shows that Madam Mg had lost mental capacity as of 3 March 2022 (ie the day when she was examined).
(2) Dr Chong, who was engaged by Mr Lai and the Company and who had considered Dr Hung’s report as well as Mr Lai’s witness statements and pleadings, was unable to opine that Madam Ng still had mental capacity after 4 March 2022.
66. In the premises, Mr Lai, Far Trillion, and the Company, who bear the burden of raising an arguable defence, are unable to show that Madam Ng was in a position to give an assent as of the time when the 2nd Allotment took place (ie 8 July 2022).
67. For this reason alone, the suggestion that there was a general assent by all the Company’s shareholders should be rejected.
68. For completeness, it should be pointed out that there is anyhow no evidence showing that Madam Ng and NSO knew that their approval as shareholders of the Company was sought.
69. In this connection:-
(1) As pointed out in paragraph 27 above, in order for a shareholder to “assent” to a matter, it is necessary for him or her to have knowledge in respect thereof: seeEIC Services Ltd at para 135.
(2) In EIC Services Ltd at para 133, Neuberger J (as he then was) further stated:-
“If a director of a company informs shareholders of an intended action (or past action) on the part of the directors, in circumstances in which neither the directors nor the shareholders aware that the consent of the shareholders is required to that action, I do not think it is right, at least without more, to conclude that the shareholders have assumed to that action for Duomatic purposes. As a matter of ordinary language and legal concept, it does not seem to me that, in such circumstances, it could be said that the shareholders have ‘assent[ed]’ to that action. The shareholders have simply been told about the action or intended action, on the basis that it is something which can be, and has been or will be, left to the directors to decide on, and no question of ‘assent’ arises.”
70. In the present case, on the assertions made by Mr Lai and the Company:-
(1) It is only alleged that NSO and Mr Rick Ng reached an understanding with Mr Lai that they would take up some shares in the Company through a corporate vehicle (ie Far Trillion). In this sense, NSO and Mr Rick Ng acted as the counterparty to the Company. There is no suggestion, let alone evidence, that NSO was approached as a shareholder about the allotment and that his consent in the capacity as a shareholder of the Company was sought.
(2) Insofar as Madam Ng is concerned, it is only alleged that Madam Ng told Mr Lai to reach a settlement with Mr Rick Ng/NSO and to avoid litigation. However, there is no suggestion, let alone evidence, that Madame Ng was asked to consent or approve the allotment in the capacity as a shareholder.
71. For all the above reasons, I conclude that the 2nd Purported Allotment was void and invalid.
C6. Disposition
72. In the premises, I will enter summary judgment in favour of the Committee, and grant the declarations and consequential orders sought under paragraphs 1, 3, 5, 6, and 7 of the summons dated 8 July 2025 in relation to the O.14 Application.
73. I also make a costs order nisi that Mr Lai and Far Trillion shall pay the costs incurred by the Committee in respect of the O.14 Application, to be taxed forthwith if not agreed (with certificate for 2 counsel).
C7. Other Remarks
74. For the avoidance of doubt, it should be pointed out that my determination of the O.14 Application is based on the invalidity of the purported corporate acts on the part of the Company canvassed hereinabove. It is not my intention to resolve the underlying factual disputes between the parties. If Mr Lai and/or Far Trillion take the view that they have valid bases for pursuing claims in respect of the interests in the Company, this decision should not be construed as a determination against their intended claim (if any).
D. The Injunction Variation Application
75. The Committee seeks to vary paragraph 2(3) of the Interlocutory Injunction Order by imposing (i) a spending limit of HK$90,000 per month; and (ii) a proviso that Mr Lai and the Company may vary the spending limit by seeking the Committee’s consent upon providing satisfactory documents or making an application to the Court.
76. As indicated in Mr Man’s submissions, if the court allows the O.14 Application, it is expected that the Committee would be able to exercise control of the Company, and, as such, the Injunction Variation Application would become academic.
77. In light of my findings and conclusion set out in section C above, it is unnecessary to deal with the Injunction Variation Application substantively.
78. However, for completeness, I should indicate that had I disallowed the O.14 Application, I would have acceded to the Injunction Variation Application. It does appear to me that some aspects of the Company’s expenditure were suspicious. In my view, the proposed variations are reasonable and necessary. Unsurprisingly, in his submissions, Mr Tam fairly indicated that the Injunction Variation Application was agreeable to Mr Lai, Far Trillion, and the Company.
79. I will make no order as to the summons dated 8 July 2025 in relation to the Injunction Variation Application.
80. I also make a costs order nisi that there be no order as to costs in respect of the Injunction Variation Application.
81. Lastly, I express my gratitude to Mr Bernard Man SC, Mr Keith Lam, Mr Oscar Tam, and Ms Agnes So for their most helpful assistance.
| | (Alan Kwong) |
| | Deputy High Court Judge |
Mr Bernard Man, SC and Mr. Keith Lam, instructed by Messrs Freda Lim & Co, for the Plaintiff
Mr Oscar Tam and Ms Agnes So, instructed by Messrs James K L Sin & Associates, for the 1st , 2nd , 4th Defendants
Messrs Charles Yeung Clement Lam Liu & Yip, for the 3rd Defendant (Attendance excused)
[1] The minutes were purportedly signed by Madam Ng herself and Madam Ng in the capacity as proxy for NSO.
[2] This is subject to the caveat of “Unless otherwise determined by the Company in General Meeting”. However, there is no evidence before the court showing that the Company’s shareholders had pass any resolution in a general meeting providing that the Company could have 1 director only or that the requirements under article 6 should be varied or disregarded.
[3] This is subject to the caveat of “Unless otherwise determined by the Directors”. However, there is no evidence before the court showing that the Company’s directors had pass any resolution in a board meeting providing that the quorum of a director meeting could be 1 or that the requirements under article 12 should be varied or disregarded.