Yuen Yin Kwan v. Sino Insurance Brokers Group Ltd and Another

HCMP 452/2019

[2020] HKCFI 284

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 452 OF 2019

_______________

_______________

_______________

_____________

JUDGMENT

_____________

A.  INTRODUCTION

1.This is an application by way of Originating Summons under section 42 of the Companies Ordinance[1] that certain documents (“the Documents”) filed at the Companies Registry (“the Registry”) be declared null and void and be removed from the Companies Register (“the Register”).

2.The 1^st respondent was incorporated in Hong Kong on 1 August 2017.  The 2^nd respondent was incorporated in Bermuda and was registered in Hong Kong on 10 September 2010 under Part IX of the then Companies Ordinance[2], and has remained registered under the corresponding provisions of the current Companies Ordinance. According to the statement filed by the Registrar of Companies (“the Registrar”) pursuant to section 43(2) of the Companies Ordinance, since 26 April 2019 (after the Originating Summons was issued on 27 March 2019), it has been known as Hang Pin Living Technology Company Limited (杭品生活科技股份有限公司).[3]

3.The Documents, on their face, show:

(1) On 31 October 2018, the applicant was appointed the company secretary of the 1^st respondent, replacing one Chan Yin Kwan (“Chan”).  The document number is 22601824787 and dated 31 October 2018.  The document was signed by Chan as the company secretary.  Chan is also called Berni.

(2) On 19 November 2018, the applicant ceased to be the company secretary of the 1^st respondent, the reason being “Resignation/Others”. She was replaced by one Huang Huajuan (“Huang”). The document number is 22000851574 and dated 19 November 2018.  The document was signed by one Lam Kai Yeung (“Lam”), a director of both respondents.

(3) On 31 October 2018, the applicant was appointed the authorized representative of the 2^nd respondent, replacing Chan.[4]  The document number is 22601824783 and dated 31 October 2018.  The document was signed by Chan as the authorized representative.

(4)     On 19 November 2018, the applicant ceased to be the authorized representative of the 2^nd respondent. She was replaced by Huang. The document number is 22000851575 and dated 19 November 2018.  The document was signed by Lam.

4.According to documents filed at the Registry, Chan was the predecessor of the applicant both as the company secretary of the 1^st respondent and the authorized representative of the 2^nd respondent, being in those positions from 30 November 2017 to 31 October 2018. 

5.The applicant’s case is that she never agreed to, and was not appointed, the company secretary of the 1^st respondent or the authorized representative of the 2^nd respondent at any time.  The respondents say she did and she was.  This is a dispute on facts.

6.Section 42 provides as follows:

“(1) The Court may, on application by any person, by order direct the Registrar to rectify any information on the Companies Register or to remove any information from it if the Court is satisfied that –

(a) the information derives from anything that –

(i) is invalid or ineffective; or

(ii) has been done without the company’s authority; or

(b) the information –

(i) is factually inaccurate; or

(ii) derives from anything that is factually inaccurate or forged.

(4) The Court must not order the removal of any information from the Companies Register under subsection (1) unless it is satisfied that --

(a)    even if a document showing the rectification in question is registered, the continuing presence of the information on the Companies Register will cause material damage to the company; and

(b)   the company’s interest on removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register”.

7.The sole ground of the application is that the Documents contain information that the applicant was the company secretary of the 1^st respondent, and the authorized representative of the 2^nd respondent, from 31 October 2018 to 19 November 2018, which is “factually inaccurate”: see section 42(1)(b)(i).

8.Apart from disputing her factual case, the respondents also submit that the applicant has failed to satisfy the requirements of section 42(4) for removal, as the continued presence of the information will not cause any “material damage” (in Chinese “重大損害”) to the respondents.  As stated by G Lam J in Re China Nice Education Research Publishing Investment and Management Co Ltd[5], the question is whether the continued presence of the incorrect information will cause material damage to the company, and not any other person such as the applicant even if a document showing a rectification is registered.

9.There are two issues before me: (i) whether the information referred to at §3 above is factually inaccurate; and if so, (ii) whether section 42(4) is a hurdle to the grant of the relief of removal to the applicant.

B.    FACTUAL INACCURACIES

10.Despite the factual dispute, there is no direction that the matter be continued as if begun by writ, or that there should be cross-examination of the deponents of the affirmations before me.  When I raise this at the hearing, both counsel ask me to resolve the dispute by considering the affirmation evidence of the deponents, each saying that the other side’s case is unbelievable.  I shall therefore consider whether the case of each side as presented on affirmation is believable, so as to see if I can resolve the dispute on affirmation evidence.  If I cannot, then, as I have pointed out to Mr Pang, counsel for the applicant, he would fail on the burden of proof and I would have to dismiss this Originating Summons, given that there is no application to have the matter continued as if begun by writ or for cross-examination.  Mr Pang fairly accepts this to be the case.  I shall adopt the approach of DHCJ To (as he then was) in Ip Kam Wah v Fair City Group Ltd[6] (with the exception that if the dispute cannot be resolved on affirmation evidence I shall dismiss the Originating Summons):

“I accept that, unlike the plaintiff in an O.14 application, the plaintiff in an originating summons procedure bears the burden of proof. When faced with conflicting affidavits from both parties, the court will be failing in its duty if it should take the assertions in the affidavits on their face value in isolation and jump to the conclusion that there is a triable issue without first considering whether the assertions in the affidavits are believable. I bear in mind the test laid down by Bokhary JA (as he then was) in Re Safe Rich Industries Ltd (unrep., Civ App No 81 of 1994, [1994] HKLY 183) that whether the assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as was either undisputed or beyond reasonable dispute. In an originating summons procedure, it is only when the court is satisfied after having undertaken that exercise that factual disputes could not be resolved on affidavit evidence that oral evidence or trial should be considered”.

11.The applicant’s case is as follows:

(1) She was educated up to Form 6.

(2) She had been working for a company called Sunway International Management Limited (“Sunway”), which shared management personnel and directors with the respondents, as a deputy administration officer as from 29 August 2018, having been introduced to Sunway by her husband (“Cheung”), who was employed as a driver by Sunway and was asked by Lam to refer persons who might be interested to work for Sunway in administration, human resources, reception and as cashier.  Despite her title she was, for all intents and purposes, a receptionist.  She sat at the front desk of Sunway and was only required to do menial tasks, which included informing relevant persons when visitors arrived, and answering phone calls.  She was not capable of doing any tasks outside her receptionist position.  Her monthly salary was HK$15,000 (to be adjusted to HK$16,000 after completion of the probationary period of three months).

(3)     Sometime in late October 2018, Lam mentioned to Cheung that the 2^nd respondent needed a person to replace an employee that was about to leave and asked whether the applicant was interested in joining the 2^nd respondent under the same position as she held with Sunway.  Lam told Cheung that the applicant would be doing exactly the same thing and paid the same.  As for salaries, despite Cheung asking whether the applicant would be paid HK$16,000 per month which would be her adjusted salary after probation with Sunway, Lam said the applicant would start at HK$15,000 and to be adjusted after three months.

(4) The applicant agreed to work for the 2^nd respondent.  Lam never mentioned anything about the 1^st respondent.

(5) When the applicant arrived at the office of the 2^nd respondent on 31 October 2018, she was attended to by Chan.  Chan handed over two pieces of paper to the applicant with some tasks written on them.  The papers say:

“Berni’s Handover List

1) CR filling (‘CR annual return timetable’)

2) MPF (every month before 10^th) – starting from beginning of Nov 2018

3) Issue cheque

- Cannon -> Champion Success

- Others -> HLJK

- * you’re responsible to double check the amount and whether we should make the payment

- * remember to check account balance

- *prepare check around 25^th each month, ORIX

- Bank transfer (*admin fee), bank note

4) Payment request

- “Common” (driver) -> user ID: [provided]; pw: [provided]

- “save as” payment request form in driver, as detail as you can so you can check back (as record)

- Sign -> Elaine, Jane, Xue, Lam, (Zhi)

5) Salary

Shred contact of Chen Hong’s mom – wechat bank slip

6) BOC accounts

- Keep weekly record

- *since Nov 2018, Talent Premium account need to have a balance of at least HK$50,000 (per day), or a HK$1,550,000 one-time transaction, a $120 fee charge every month otherwise

- *enter “中銀企業網上銀行” (User name: [provided]; pw: [provided]

- Can’t get in to Sino’s acct -> copy and paste from last week is fine

- TP – change contact # (when receive email/phone message → forward to XW & Lam)

7) Loan interest receive every quarter & prepare debit note (about 10 days before the repayment date) (June/Sept/Dec/March)

8) Airticket/hotel booking – Huamin Mandy (whatspp: [provided], Lam’s info, online check-in, get seat

9) Key, meeting room setting (usually use chairman passcode 1), tea to guest

10) Autotoll monthly statement – match with driver’s claim

11) Remember to keep record/filling (**both scan copy and digital copy)

Follow-up

1) BOC dividend account open – need seal and signature from Mr. Zhi, other docs are ready

2) Confirm closure of HSBCNET, HSBC new bank signer (Lam) → change address, company name (no extra fee)

3) ***資金運用表 – updated up to 28 Aug (1682 current acct)

(URGENT) - bank transfer record: check “monthly end movement” folder, also “Bank” folder from email as reference

- input in Chinese

- deadline: 1 Dec 2018

4) Group med – already pass all agent contacts and plans (AIA, Manulife, FTlife, Prudential), can also find AXA herself; basic plan & dental, HKSH

5) scan, filling, and organize emails, files and folders”.

(6) She provided personal details which she believed were for the purpose of preparing her employment contract. She was told that she would sit in a cubicle outside someone’s office and not, to her surprise, near the front door. She was provided with passwords which allowed her to access the computer on her desk. She was not told of her exact duties or that her work would be outside the ambit of a receptionist. Chan also gave her the keys to the front door of the 2^nd respondent.

(7) She also asked Lam that day whether her salary could be HK$16,000 per month but he refused. She did not press.

(8) “Afterwards” (the applicant does not say when) she discovered, from the computer, documents indicating that she was to be the authorized person of the 2^nd respondent and the company secretary of the 1^st respondent. She decided not to take up the work for the 2^nd respondent, and informed Lam accordingly through Wechat on 3 November 2018. She also returned the key later.

(9) In her affirmation, she says:

“28. No one, whether Lam or Berni had informed me of the documents or asked me whether I was willing to take up the aforesaid positions. Anyway, I would not have taken up or allowed them to use my name for those positions as I did not know the extent of such positions or liability.

29. Further I had no training relevant to the position of company secretary, even until today I am not sure exactly what a company secretary does, but I do know that most company secretaries hold university degrees or undergo specialized training.

30. All of the above made me feel like I was duped into taking up positions and responsibilities which were well outside my capabilities or agreed upon”.

12.The respondents’ case, contained in the affirmation of Lam, is as follows:

(1) They shared the same office.

(2) Chan was the administrative assistant of the 2^nd respondent.  As she was responsible for all administrative works of the 2^nd respondent and its “group companies”, she was also the company secretary of the 1^st respondent and the authorized representative of the 2^nd respondent.

(3) Chan tendered her resignation as from 31 October 2018.  Cheung recommended the applicant to take up Chan’s position.  After a “brief discussion”, Lam found her suitable and agreed to employ her.

(4) During the handover, Chan passed on and explained to the applicant all the administrative works of the respondents, including but not limited to the basic filing procedures (and requirements) at the Registry.  Further:

“Berni Chan explained to the Applicant her position as administrative assistant shall include being the authorized person of the 2^nd Respondent and the company secretary of the 1^st Respondent for the purpose of completing all filing requirements”.

(5) Lam instructed Chan to prepare the employment contract for the applicant, and so Chan contacted the applicant by WhatsApp on 23 October 2018 to obtain her personal information.  Lam produces the WhatsApp correspondence between Chan and the applicant between 23 October 2018 and 2 November 2018.  The correspondence shows that on 23 October 2018, Chan asked the applicant for her full Chinese name, address and identity card number for preparing the contract.  Amongst the messages, the following are now relied upon by Lam and Mr Lee, counsel for the respondents:

(a) 24 October 2018 at 9:17 pm from the applicant (who called herself “Elaine 58 Cashier”) to Chan:

“星期一過去你果邊學野, 對嗎?”

To which Chan replied at 9:32 pm:

“過來交接,大概半個鐘到,大部份野上星期已講完”

(b) 31 October 2018 at 6:23 pm from the applicant to Chan:

“我想問公司註冊處你本身做簽名人係做交表果個?”,

to which Chan replied:

“唔係好明你問題”.

(6) Regarding the handover list, Lam relies on tasks 1 (filing of documents at the Registry), 3 (payments by cheque) and 6 (managing the bank accounts at the Bank of China) as the work of a company secretary, and follow-up task 2 (closure of HSBCNET and change of company name and address) as the duty of an authorized person.  In his submissions, Mr Lee also relies on task 11 (record keeping and filing).

(7) Chan also had a telephone conversation with the applicant on 31 October 2018 when the former explained to the latter the role of an authorized person of the 2^nd respondent, and that she explained to the latter the role of company secretary for the 1^st respondent and it would not require a degree or special training.

13.I accept, on a balance of probabilities, the applicant’s case, and I find, that she never agreed to, and was not appointed, the company secretary of the 1^st respondent or the authorised representative of the 2^nd respondent at any time, for the following reasons.

14.Given what she says to be her background, which is not disputed, she clearly does not have the qualifications, training and experience to be a company secretary.  A company secretary is the chief administrative officer of a company.  As stated in Halsbury’s Laws of Hong Kong[7]:

“[95.0702] … Although his functions are ministerial only, he has important duties to discharge in a modern company. His primary duties are to ensure that the company’s affairs are properly conducted, and its records properly kept and filed, in accordance with the provisions of the Companies Ordinance (Cap 622) and the company’s articles of association. Apart from statutory duties, his duties are those assigned to him by the company’s articles, his contract of service with the company and by the directors. In general, he has ostensible authority to make representations and enter into contracts on behalf of the company, relating to the day-to-day administration of the company …

[95.0703] … The statutory duties under the Companies Ordinance which must be, or usually are, discharged by the company secretary are: signing the annual return and the certificate by a private company required to be sent with the annual return; delivering for registration returns of allotments, and contracts for allotments of shares paid up otherwise than in cash; issuing certificates of shares, debentures and debenture stock; delivering particulars of mortgages or charges for registration; allowing inspection of, and sending copies of, the debenture register to debenture holders; giving notice to the Registrar of Companies of an alteration of share capital; allowing inspection of, and sending copies of. The register of members; and allowing inspection of the register of directors and secretaries”.

15.In my judgment, given the role, functions and duties of a company secretary, it is inherently unbelievable that the applicant, who is patently not qualified to be so appointed, was in fact appointed or that she agreed to be appointed.  (On the other hand, there is no evidence before me on the qualifications, experience and suitability of Chan and Huang as the company secretary.)

16.It also appears odd that, if the applicant was indeed appointed the company secretary of the 1^st respondent on 31 October 2018, it was Chan and not the applicant who signed the notice as the company secretary stating the resignation of Chan and the appointment of the applicant.  The same applies to the signing of the notice by Chan as the authorized representative of the 2^nd respondent on 31 October 2018.

17.I do not believe that the matters relied upon by the respondents support their case.  The WhatsApp messages do not support the suggestion that the applicant, while having to learn what was required of her in her new job, was being trained to be a company secretary.  Regarding the message at 6:23 pm on 31 October 2018, as Chan herself suggested in reply, it is difficult to understand the question, and it is certainly, in my judgment, not sufficient to support the respondent’s case that that shows that the applicant was being appointed the company secretary.  In so far as the message refers to the actual filing of documents, that is a task that can be, and is usually, performed by junior staff rather than the company secretary.  The same can be said of tasks 1 and 11 on the handover list which relate to filing at the Registry.  The only specific reference there is to annual returns which are fairly standard and can be handled by junior staff, and not to other, more complicated, documents which may have to be handled by a company secretary.  Nor do I consider any of the other tasks on the handover list relied upon by the respondents to be tasks which are to be performed only by company secretaries but are tasks that can be performed by junior staff. 

18.Importantly, there is no explanation as to why Chan has not provided an affirmation referring to what she was supposed to have discussed with the applicant, as relayed by Lam by way of hearsay evidence.  Lam is able to produce WhatsApp messages between Chan and the applicant and so he must have been in contact with Chan, who has been co-operative, during the evidence preparation stage.  Nor has Lam produced any draft employment contracts for the applicant even though he says he asked Chan to prepare one around 23 October 2018, which must have been prepared by 31 October 2018, when Chan was supposed to leave.  Such a draft would show what were the duties of the applicant.  Given the functions and duties of a company secretary, that Chan had explained to the applicant that the role of company secretary would not require a degree or special training is also inherently incredible.

19.Even though the duties of an authorized representative of a registered company is less onerous, there is no suggestion that the applicant was separately appointed as the authorized representative of the 2^nd respondent as distinct from the appointment as the company secretary of the 1^st respondent.  Since it is inherently unbelievable for the applicant to be appointed, and agreed to be appointed, the company secretary of the 1^st respondent, equally it is inherently unbelievable for the applicant to be appointed, and agreed to be appointed the authorized representative of the 2^nd respondent.

20.In the premises, the information on the Register, gleaned from the Documents, that the applicant was the company secretary of the 1^st respondent, and the authorized representative of the 2^nd respondent, from 31 October 2018 to 19 November 2018, is factually incorrect.  I so find.

C.    REMOVAL OR RECTIFICATION

21.If there is factually incorrect information on the Register, section 42 provides for two possible methods of dealing with it: rectification and removal.

22.In my judgment, section 42(4) shows a clear intention that the preferred method is rectification, rather than removal, because an additional requirement is laid down for removal, namely that the continuing presence of the information on the Register will cause material damage to the company, “even if a document showing the rectification in question is registered”.[8] That is, only if a rectification is insufficient to avoid any material damage, which a removal can, then should a removal be ordered. 

23.It also follows that if, by the nature of the information or the inaccuracy, rectification is somehow not possible, then arguably section 42(4), and the requirement of material damage to the company for removal to be ordered, is not engaged.  I do not, however, need to decide this point because in my judgment rectification is possible in a situation like the present.

24.At my invitation, Ms Margaret Chan (“Ms Chan”), a senior solicitor at the Registry, very helpfully files a statement explaining what can be done in situations like the present by way of rectification.  She explains as follows:

“For the 1^st Respondent

6.1 1^st Form ND2A (Ref. b/c no.: 22601824787)

(a) This is the specified form the 1^st Respondent delivered to the Registrar on 31 October 2018 reporting the cessation of appointment of Chan Yin Kwan and the appointment of the Applicant as the company secretary of the 1^st Respondent effective from 31 October 2018.

(b) On the assumption that the Applicant did not agree to be appointed, and did not act, as the 1^st Respondent’s company secretary, the particulars contained in section 3 of the 1^st Form ND2A would become factually inaccurate and the confirmation made by Chan Yin Kwan, the former company secretary of the Company, concerning the appointed company secretary of the Company in section 5 would become invalid.

(c) If the 1^st Form ND2A is to be rectified by the filing and registration of an amended document, instead of having the 1^st Form ND2A being removed from the Companies Register, the Registrar may rectify the incorrect information in the Companies Register by registering an amended document showing the rectification. The word ‘Amended’ would be printed on the top of the first page of the amended 1^st Form ND2A. If the amended document is acceptable by the Registrar, it will be registered in the Companies Register. The Registrar will annotate on the 1^st Form ND2A and the amended 1^st Form ND2A for cross-referencing in a manner as indicated in the copy annexed hereto marked ‘CYF-4’.[9]

6.2 2^nd Form ND2A (Ref. b/c no.: 22000851574)

(a) This is the specified form the 1^st Respondent delivered to the Registrar on 19 November 2018 reporting the cessation of appointment of the Applicant and the appointment of Huang Huajuan as the company secretary of the 1^st Respondent effective from 19 November 2018.

(b) On the assumption that the Applicant has never been appointed by the 1^st Respondent as its company secretary, the particulars contained in section 2 of the 2^nd Form ND2A would become factually inaccurate.

(c) If the 2^nd Form ND2A is to be rectified by the filing and registration of an amended document, instead of having the 2^nd Form ND2A being removed from the Companies Register, the Registrar may rectify the incorrect information in the Companies Register by registering an amended document showing the rectification. The word ‘Amended’ would be printed on the top of the first page of the amended 2^nd Form ND2A. If the amended document is acceptable by the Registrar, it will be registered in the Companies Register. The Registrar will annotate on the 2^nd Form ND2A and the amended 2^nd Form ND2A for cross-referencing in a manner as indicated in the copy annexed hereto marked ‘CYF-5’.[10]

For the 2^nd Respondent

6.3 1^st Form NN8 (Ref. b/c no.: 22601824783)

(a) This is the specified form the 2^nd Respondent delivered to the Registrar on 31 October 2018 reporting the cessation of appointment of Chan Yin Kwan and the appointment of the Applicant as the authorized representative of the 2^nd Respondent effective from 31 October 2018.

(b) On the assumption that the Applicant did not agree to be appointed, and did not act, as the 2^nd Respondent’s authorized representative, the particulars contained in section 3 of the 1^st Form NN8 would become factually inaccurate.

(c) If the 1^st Form NN8 is to be rectified by the filing and registration of an amended document, instead of having the 1^st Form NN8 being removed from the Companies Register, the Registrar may rectify the incorrect information in the Companies Register by registering an amended document showing the rectification. The word ‘Amended’ would be printed on the top of the first page of the amended 1^st Form NN8. If the amended document is acceptable by the Registrar, it will be registered in the Companies Register. The Registrar will annotate on the 1^st Form NN8 and the amended 1^st Form NN8 for cross-referencing in a manner as indicated in the copy annexed hereto marked ‘CYF-6’.[11]

6.4 2^nd Form NN8 (Ref. b/c no.: 22000851575)

(a) This is the specified form the 2^nd Respondent delivered to the Registrar on 19 November 2018 reporting the cessation of appointment of the Applicant and the appointment of Huang Huajuan as the authorized representative of the 2^nd Respondent effective from 19 November 2018.

(b) On the assumption that the Applicant has never been appointed by the 2^nd Respondent as its authorized representative, the particulars contained in section 2 of the 2^nd Form NN8 would become factually inaccurate.

(c)      If the 2^nd Form NN8 is to be rectified by the filing and registration of an amended document, instead of having the 2^nd Form NN8 being removed from the Companies Register, the Registrar may rectify the incorrect information in the Companies Register by registering an amended document showing the rectification. The word ‘Amended’ would be printed on the top of the first page of the amended 2^nd Form NN8.  If the amended document is acceptable by the Registrar, it will be registered in the Companies Register.  The Registrar will annotate on the 2^nd Form NN8 and the amended 2^nd Form NN8 for cross-referencing in a manner as indicated in the copy annexed hereto marked ‘CYF-7’.[12]”

25.I accept and find that the factually inaccurate information (i.e. the alleged appointments of the applicant as the company secretary of the 1^st respondent and as the authorized representative of the 2^nd respondent, and the cessations of such appointments) can be rectified in the manner as explained by Ms Chan.

26.For the applicant, Mr Pang accepts that the Documents “can indeed be rectified (without removal), by way of including annotations of documents”.  However, he goes on to submit that since “the only way the Documents can be rectified properly to reflect the proper circumstances, is by deletion of any references to the Applicant (and as such filing of amended version of the Documents with such deletions)”, the effect of such rectification effectively changes the inherent nature of the Documents, and therefore “the Documents cannot be adequately rectified, whether by filing of additional documents or otherwise, and should instead be removed”.

27.I do not accept these submissions.  First, I do not understand how the inherent nature of the Documents have changed by rectification, as they, as rectified, remain notices recording the cessation of the appointments of Chan as from 31 October 2018 and the appointments of Huang as from 19 November 2018, which are precisely what those documents (being notices of change of company secretary or authorized representative) are for.  The fact that, as rectified, the Documents show a “vacuum” in the relevant positions from 31 October 2018 to 19 November 2018 does not affect the true nature, and is, in any event, according to the applicant, in accordance with the facts.  Second, the object of the rectification is to correct factual inaccuracies appearing on the Register, i.e. the incorrect fact that the applicant was the company secretary of the 1^st respondent and the authorized representative of the 2^nd respondent in the said period, which the rectification will show that she was never so appointed. That is the whole purpose of the rectification.  I do not see how the changing of the nature of the Documents or otherwise is relevant.  Certainly that is none of the applicant’s concern.

28.Mr Pang refers to what G Lam J said in China Nice Education Research[13] but that was in the context of whether removal of an incorrect return of allotment should be ordered because of material damage despite rectification.  In fact, what the learned Judge said there[14] confirms that rectification by deletion and amendment was possible regarding a notice of change for company secretary.

29.I pause here to note that in her affirmation the applicant says that the respondents have “rectified” the records at the Registry.  However, what she means, in context, is clearly that the respondents had filed documents showing that she had ceased to be the company secretary of the 1^st respondent and the authorized representative of the 2^nd respondent as from 19 November 2018. There is clearly no rectification in the sense that the (incorrect) information on the Register that she occupied those positions from 31 October 2018 to 19 November 2018 has been corrected, and it is this latter sense which the word “rectification” is used in section 42 and of relevance here.  Both Lam in his affirmation and Mr Lee in his submissions emphasise repeatedly that the applicant has accepted that the matters had been rectified, but in my judgment it is patently clear that the applicant is not saying that there was rectification in the sense that that the word is used in section 42.

30.Since rectification is possible in this case, I have to consider whether non-removal of the Documents will cause material damage even if there is rectification. 

31.I repeat that it is material damage to the company, i.e. the respondents here, and not any material damage to others including the applicant, which is to be considered.

32.Mr Pang submits that the non-removal of the Documents will bring harm to the respondents in the following manner:

(1) The respondents will be seen to be willing to employ staff that are overwhelmingly unqualified as officers of the company giving a bad impression to potential business partners.

(2) The changing back and forth of the respondents’ company secretary and authorized representative within such a short time span gives rise to an impression that the respondents are unstable or have internal strife.

(3) The Documents are inherently confusing as they indicate that Chan was ceasing to be company secretary and authorized representative of the respondents, yet at the same time she was signing on the relevant documents as the company secretary and authorized representative.

(4) Future potential business partners, especially in the context of money lending, may take the view that the constant changing of authorized representative of a non-Hong Kong company such as the 2^nd respondent to be an adverse sign as it may mean that it will be difficult to serve documents on such company.

33.I do not believe that any of these matters will cause material damage to the respondents if there is no removal, where rectification is ordered instead:

(1) The first matter will be corrected by the rectification.  The rectification will show that the applicant was never appointed as the company secretary of the 1^st respondent or the authorized representative of the 2^nd respondent, and the “wrong impression” will not persist.

(2) For the second matter, with the rectification, the Documents will show that Chan ceased to be appointed on 31 October 2018 and Huang was appointed on 19 November 2018, with a vacuum in between.  This may or may not give rise to the impression as alleged but that is the fact.  I do not see how representing the correct factual situation, even if that shows the company in a bad light, can in any way be said to be causing “material damage” to a company.  Indeed Mr Pang submits that the effect of a rectification will cause material damage to the respondents as that would show that they did not have the necessary officer for a period and thereby in breach of its statutory obligations. In effect he is saying that rectification showing the true facts should not be ordered as that would expose the respondents to a breach of the law.  This only needs to be stated to be rejected. 

On the other hand, if there is removal of the Documents and nothing more, the public will just assume that Chan has remained appointed to those positions, which is of course incorrect, and is not a course I should countenance. If, however, the removal of the Documents is to be accompanied by the filing of documents showing the true positions, i.e. that Chan ceased to be appointed on 31 October 2018 and Huang was appointed on 19 November 2018 (with the inference that there was a vacuum in between), which is what the respondents have to do as a matter of law, this will give the same message and impression to the public as a rectification in any event, and there is therefore no reason to order a removal.  If the rectification alone will cause material damage to the respondents, then so would a removal.

(3) As for the third matter, I do not believe that any such confusion will cause any damage, let alone “material” damage (“重大損害”), to the respondents.  Even though the threshold for section 42(4) to be engaged is “fairly low”[15], a reader of the Documents are rectified will clearly see that Chan had ceased to be appointed as from 31 October 2018, with the signing of the Documents by her, although probably inappropriate, as her last act as appointed.  I do not see how anyone will be confused or any such confusion will cause any damage to the respondents whatsoever.

(4) For the fourth matter, the analysis above for the second matter applies mutatis mutandis.

34.A number of authorities considering whether there is “material damage” if no removal is ordered are cited to me.  As this is essentially a question of fact, I need not deal with them here. 

35.For reasons stated above, even though I find that the Documents contain factually inaccurate information, I must not order removal of the Documents.  It could not have been the intention of the legislature that I am to, and can, do nothing about the fact that information found by me to be factually inaccurate exists on the Register, when the applicant only asks for an order of removal which is excluded on the facts by section 42(4).  Rather, reading section 42(1) and (4) together, it is to me plain that, in an application for removal, once one of the four circumstances stated in section 42(1)(a) or (b) is found to exist, the Court is directed and empowered to order rectification unless the conditions there for the making of an order for removal are satisfied.  In China Nice Education Research, even though the applicant also only asked for orders of removal of the documents there[16], on finding that the circumstances under section 42(1)(a) or (b) had arisen but that the conditions for ordering removal under section 42(4) were not satisfied for some of the documents, G Lam J also ordered rectification.

D.    DISPOSITION

36.For the above reasons, I grant an order rectifying the information on the Register regarding the alleged appointments and cessation thereof of the applicant as the company secretary of the 1^st respondent and as the authorized representative of the 2^nd respondent.  The applicant is to prepare and file amended documents as indicated in the written submissions of Ms Chan to effect the rectification within 14 days of the date of this judgment, and the Registrar shall register the same.  The Registrar shall also annotate the Documents currently registered in the manner indicated by Ms Chan upon registering the amended documents filed by the applicant.

37.As for costs, even though an order for rectification is made, as the applicant fails to overcome the hurdle of section 42(4), I make an order nisi that the respondents are to pay the costs of the Registrar, and 75% of the costs of the applicant, to be taxed if not agreed.  If any party, including the Registrar, wishes to apply for a variation of the costs order nisi, she or it is to do so by summons within 14 days of the date of this judgment.

38.I thank counsel for their assistance.  I would in particular wish to express my sincere gratitude to Ms Chan for accepting my invitation to make further submissions on the question of rectification of the Documents, and her very helpful submissions.

Mr Ronald Pang, instructed by KCL & Partners, for the applicant

Mr Bryan Lee, instructed by Tung Ng Tse & Lam, for the 1^st and 2^nd respondents

Ms Margaret Chan, for the Registrar of Companies, by written submissions only