Li Ngan Kwan v. Registrar of Companies and Others

HCMP 1432/2019

[2020] HKCFI 2230

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1432 OF 2019

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Before: Deputy High Court Judge Raymond Leung SC in Chambers

Date of Hearing : 16 July 2020

Date of Decision : 3 September 2020

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DECISION

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PROCEDURAL HISTORY

1.The Originating Summons herein was first taken out by the Plaintiff on 6 September 2019 against the 1^st Defendant, the Registrar of Companies (the “Registrar”), and the 2^nd Defendant, Billion House Properties Limited (the “Company”) pursuant to section 42 of the Companies Ordinance, Cap 622 (the “Ordinance”) for rectification or removal of a Form ND2A (dated 21 March 2019) entitled “Notice of Change of Company Secretary and Director (Appointment/Cessation)” (the “Impugned Form”).

2.It is not disputed that the Impugned Form was filed or caused to be filed by Madam Gao Lihui on 22 March 2019. By a summons dated 13 November 2019, Madam Guo applied to join as a party. It was alleged that she had not been informed by the Plaintiff of the application under the Originating Summons.

3.To put the record straight, after issuing the Originating Summons, on or about 12 September 2019, the Plaintiff’s former solicitors (Messrs. Yan Lawyers) did send by registered post a set of the papers to Madam Gao at her address in Shenzhen as stated on the Impugned Form, which turned out to be erroneous as to the block number in the housing estate[1]. It would therefore appear that the Plaintiff has discharged his duty in notifying Madam Gao as an interested party[2].

4.Meanwhile, on 8 October 2019, the Registrar filed a statement (the “Registrar’s Statement”), pursuant to section 43(2) of the Ordinance, giving a summary of the particulars of directorship of the Company at various stages as discernible from records held by the Companies Registry (the “Registry”).

5.By letters dated 8 October 2019 and 19 November 2019, the Registrar informed the Court that she would take a neutral stance in respect of (1) the Plaintiff’s application herein; and (2) the application of Madam Gao to join as a party. In due course, by a Consent Order dated 12 December 2019, leave was granted by the Ng J for Madam Gao to join as the 3^rd Defendant.

6.On 16 January 2020, the 3^rd Defendant issued a summons (the “Summons”) to apply for (1) a stay of the proceedings under the Originating Summons pending the final determination of the trial under HCA 276 of 2007 (the “Action”), which has been adjourned part-heard since 29 July 2008; (2) all further or alternative directions as the Court may deem just and expedient.

7.By a letter dated 22 January 2020, the Registrar indicated that she would also take a neutral stance in the 3^rd Defendant’s application and requested to be exempted from attendance at the hearing of the Summons. In due course, directions for filing of affirmations were given by Linda Chan J on 5 March 2020. This is the substantive hearing of the Summons. Mr Andrew Mak appeared on behalf of the 3^rd Defendant and Miss Sara Wong (together with Miss Natalie So) appeared on behalf of the Plaintiff.

8.For completeness, there was another summons issued by the 3^rd Defendant (dated 10 July 2020) for extension of time to file the 2^nd Affirmation of Gao (dated 7 July 2020).  At the hearing, Miss Tong informed the Court that the Plaintiff had no objection to this other summons without prejudice to the Plaintiff’s stance that the facts and matters deposed to therein were irrelevant and she specifically reserved the right to make submissions on it.  Accordingly, I granted an order in terms of this summons for extension of time with cost to the Plaintiff in any event.

BACKGROUND

9.To avoid unnecessary contention revolving around the chequered history of the disputes between the Plaintiff and the 3^rd Defendant, I have extracted, as far as possible, the relevant facts hereinbelow from the Registrar’s Statement.  To fill in the gaps, I would make reference to the pleadings in the Action and the affirmations filed by the parties herein. Relevant matters in disputes are identified as appropriate.

10.The Company was incorporated in Hong Kong on 17 March 1992. It was (and still is) the sole shareholder of a PRC company known as Grand View Hotel (Shenzhen) Co Ltd (“Grand View”), which owned a licensed hotel in Shenzhen (the “Hotel”). In essence, the Hotel represented the sole asset of the Company.

11.The entirety of the shares in the Company was held by two corporate vehicles established in the British Virgin Islands (BVI), namely, Billion Houses Investments (Properties) Limited (“BHIP”) holding 2,120,000 shares (or 1%) and Billion Houses Investment (HK) Limited (“BHIHK”) holding 209,880,000 shares (or 99%).

12.In turn, BHIP and BHIHK were wholly owned by another BVI company, namely Billion Houses International Holdings Limited (“BHI Holdings”), which was the second defendant in the Action.

13.On the records maintained by the Registrar, the Plaintiff was appointed as a director of the Company on 29 June 1992 (as reported to the Registry on 6 July 1992[3]) until the reported cessation of his directorship on 28 July 2004[4] on the basis of an undated letter of resignation allegedly signed by the Plaintiff, which was one of the forged documents (the “Forged Documents”)  enumerated in the Schedule to the Statement of Claim filed in the Action (the “Schedule”).

14.On the Plaintiff’s pleaded case in the Action, the 3^rd Defendant herein first started to work for him in the finance department of one of his companies on or about 9 November 1998.  She was subsequently employed as a manger in the financial department of Grand View in January 1999 (see the draft Re-Amended Statement of Claim (the “Draft RAMSOC”) at paragraph 1B). Thereafter, she was successively promoted to the post of (1) Deputy Financial Controller in September 1999[5]: (2) Deputy General Manager and Financial Controller in December 1999; (3) General Affairs Deputy General Manager on or about 10 September 2001; and (4) General Manager on or about 13 May 2002[6]. She was also appointed as Legal Representative of Grand View in around January 2004.

15.Correspondingly, the 3^rd Defendant was first appointed as one of the directors of the Company as well as Financial Controller on 31 October 2001.[7]

16.The main thrust of the Plaintiff’s case in the Action was that in about 2002, grave illness befell him necessitating a kidney transplant rendering him unable to attend to his business in the Hotel. Between November 2002 and November 2003, he went to stay in Australia for recuperation and relied on the 3^rd Defendant to manage the affairs of the Company with whom he communicated by phone[8].

17.Meanwhile, on or about 30 March 2003, said the Plaintiff, he was induced by the 3^rd Defendant to return to the Hotel amidst a staff dispute over unpaid wages. He was requested by the 3^rd Defendant to sign (on behalf of Grand View) certain agreement to acknowledge its obligation to make timely payment.  The 3^rd Defendant also asked him to append his signature to about 10 pieces of blank papers representing that further circulars might need to be issued under his name to pacify the staff[9].

18.Unbeknownst to the Plaintiff at the material time, since about 16 February 2004, the 3^rd Defendant embarked upon a scheme of forgery[10] to (1) transfer the only issued share in BHI Holdings from the Plaintiff to herself; (2) procure the issue and allotment of 9 more shares in BHI Holding to herself (3) oust the Plaintiff from the respective boards of directors of BHI Holdings, BHIP and BHIHK (by way of written resolutions signed by the 3^rd Defendant purporting to approve the corresponding letters of resignation allegedly tendered by the Plaintiff).

19.Likewise, on about 28 July 2004, by a written resolution signed by the 3^rd Defendant, the board of the Company purported to accept an (undated) letter of resignation tendered by the Plaintiff (see paragraph 13 above). Accordingly, a Form D2 (signed by the 3^rd Defendant) was submitted to the Registry to report the cessation of directorship of the Plaintiff[11].

20.In brief, the scheme of forgery perpetrated and/or instigated by the 3^rd Defendant had the effect of extinguishing the Plaintiff’s rights and ownership in the Hotel. Meanwhile, three other directors were appointed (by the 3^rd Defendant) to the board of the Company on 24 November 2004. In any case, those three ceased to be directors in October or November 2006.

21.The 3^rd Defendant’s case was that while working at Grand View, she developed an intimate relationship with the Plaintiff and became his lover[12]. She played a pivotal role in assisting the Plaintiff in procuring various loans to sustain the dwindling business of the Hotel. 

22.Between 20 April 2002 and 23 May 2003, she had procured various loans totalling RMB320,900,000 and HK$145,337,000 for the benefit of Grand View and the Company in order to sustain the operation of the Hotel[13].

23.Due to his ill health and the dire financial status of Grand View and the Company, the Plaintiff was desirous to divest his interest in the Hotel (represented by the only 1 issued share in BHI Holdings) to the 3^rd Defendant on the understanding that (1) it would be held on trust for the benefit of the Plaintiff to the extent of 60%; and (2) the remaining 40% would be gifted to the 3^rd Defendant[14].

24.In late January or early February 2004, the Plaintiff gave instructions to a firm of solicitors (Messrs. Loong & Yeung) to prepare various document to give effect to the “gift”.  For the purpose of creating the trust as aforesaid, 9 more shares in BHI Holdings were issued and allotted to the 3^rd Defendant. These various documents were likewise enumerated in a counter-schedule appended to the Amended Defence and Counterclaim filed in the Action, including but not limited to those corresponding to Items 1 to 4, 4A and 5 to 8 in the Schedule, which were all dated 16 February 2004.

25.Further, on the 3^rd Defendant’s case, these documents were genuine and they were signed by, as the case might be, the Plaintiff and herself, albeit on 13 February 2004 at the firm of Messrs. Loong & Yeung[15].

26.In respect of the said undated letter signed by the Plaintiff to resign from his directorship in the Company (Item No. 9 in the Schedule), the 3^rd Defendant’s pleaded that it was signed by the Plaintiff in July 2004 but no details were given[16].

27.Consistent with the 3^rd Defendant’s case pertinent to the “gift”, a Declaration of Trust was executed by her on 16 February 2004 acknowledging that she held 6 of the 10 shares in BHI Holdings (i.e. 60%) for the benefit of the Plaintiff. 

28.The 3^rd Defendant further pleaded that there was a loan of HK$30m advanced to BHI Holdings, presumably from the Plaintiff[17]. Apparently, a corresponding Loan Agreement[18] also dated 16 February 2004 was signed between the Plaintiff and BHI Holdings but somehow the names of the borrower and the lender were inadvertently reversed[19].

29.Further, the 3^rd Defendant alleged that by a letter dated 29 April 2004, the Plaintiff declared that he no longer had any interest in BHI Holdings and its subsidiaries[20]. This was against the background of the heavy indebtedness incurred by the group of companies under the umbrella of BHI Holdings. By the end of 2003, the Hotel was valued at about RMB 340,000,000[21]. The implication is that BHI Holdings and all its subsidiaries were insolvent.

30.The Plaintiff’s stance seemed to be that he only meant to give 40% interest in the Hotel (as opposed to 40% of the shares in BHI Holdings) as a gift to the 3^rd Defendant[22].

31.Remarkably, the letter dated 29 April 2004[23] was not amongst the Forged Documents enumerated in the Schedule. Apparently, it was first raised by the 3^rd Defendant in her application to set aside the default judgment obtained by the Plaintiff in the Action[24] and was subsequently pleaded in the Defence and Counterclaim (paragraph 4(11)) filed on 27 September 2007. Thereafter, it was extensively referred to in the Reply and Defence to Counterclaim filed by the Plaintiff on 12 January 2008 (paragraphs 10 to 16) alleging forgery and alternatively, undue influence and unconscionable bargain[25]. The Plaintiff is now seeking to make reference to the same in the Draft RAMSOC (at paragraph 8A to 8C).

32.To put it mildly, the foregoing history portrayed a most convoluted state of affairs which would need to be resolved in the resumed trial of the Action.

33.Further, in the 1^st Affirmation of the 3^rd Defendant herein, she explained that since 2004, the Plaintiff asked for money from her and she duly obliged for the sake of their friendship. It transpired that the Plaintiff had incurred heavy losses by indulging in gambling in Australia and Macau and she had to bail him out.  By mid-May 2006, the Plaintiff’s demand for money became unbearable and she ceased to entertain any further request from the Plaintiff for money. Hence, the relationship between them became hostile[26].

34.Thereafter, by a Form D2A signed by the Plaintiff and filed with the Registry on 21 November 2006, the Plaintiff reported the appointment of himself and one Sun Guang Yue (“Mr Sun”) as directors of the Company since 19 May 2006[27]. The 3^rd Defendant reacted by filing a Form D2A on 5 January 2007 reporting cessation of their directorships also with effect from 19 May 2006.

35.On or about 22 November 2006, the Plaintiff filed another Form D2A reporting the cessation of the directorship of the 3^rd Defendant in the Company[28]. Thereafter, on 21 December 2006, the Plaintiff also filed a D2A for appointment of 3 other directors of the Company. The 3^rd Defendant reacted by filing a Form D2A on 29 December 2006 reporting the cessation of directorships of these 3 directors.

36.Eventually, on 16 January 2007, Messrs. Shea & Co wrote (on behalf of the Company as instructed by Plaintiff) to the Registrar to request all documents submitted by the 3^rd Defendant be removed  intimating that a report had been made to the police and a civil action  (HCA 71 of 2007) had been issued in the High Court against the 3^rd Defendant and others[29]. By a further letter dated 19 January 2007, a copy of the Writ of Summons thereof was provided to the Registrar[30]. Apparently, the Plaintiff has not taken any steps to proceed with HCA 71 of 2007.

37.By letters dated 1 February 2007, the Registrar informed the Plaintiff (through Messrs. Shea & Co) and the 3^rd Defendant (through Messrs. S.T. Cheng & Co, the former solicitors of the Company instructed by the 3^rd Defendant) that registration of documents pertinent to the directorship of the Company would be withheld in light of the disputes between the parties[31].

38.Thereafter, both the Plaintiff and the 3^rd Defendant sought to address the Registrar, through their respective solicitors, to assert their respective claims pertinent to directorship and control over the Company. Between January 2007 and January 2010, a number of documents were lodged by the Plaintiff and the 3^rd Defendant respectively for registration, which were however withheld by the Registrar in light of the ongoing disputes[32].

39.Meanwhile, on 7 February 2007, the Plaintiff commenced the Action against the 3^rd Defendant (being the first defendant therein) and BHI Holdings.  As said, a default judgment was entered against BHI Holdings in the Action on 22 March 2007, which was however set aside, inter alia, on the ground of irregular service (paragraph 31 above).

40.By way of background, BHI Holdings was not registered as a foreign company in Hong Kong.  It transpired that by a letter dated 13 August 2003 previously issued by Messrs. Loong & Yeung to Trident Corporate Services (Asia) Limited[33], a BVI company secretary or agent, the Plaintiff was designated as the contact person for BHI Holdings and a forwarding address of the Plaintiff was given. Therefore, the Writ of Summons in the Action sent to Trident for service on BHI Holdings was routed back to the Plaintiff. Therefore, the purported service was irregular.

41.In due course, trial of the Action took place before Deputy High Court Judge Anthony To from 2 to 29 July 2008 and was adjourned part-head due to the court vacation. Prior to the adjournment, the hand-writing experts for the respective parties had already given evidence. It would appear that factual evidence from the Plaintiff and the 3^rd Defendant had yet to be heard.

42.On the ground of the Plaintiff’s deteriorating health, an order was apparently obtained before the learned trial judge for the Plaintiff’s evidence to be preserved by way of an oral examination before a master in October 2008 during the course of the adjournment[34]. However, the oral examination was subsequently adjourned by consent[35]. That said, as a matter of fact, the Plaintiff eventually had another kidney transplant in January 2011[36].

43.Meanwhile, on 9 June 2010, the Registrar wrote to Messrs K.B. Chau & Co (for the 3^rd Defendant) and Messrs. Shea & Co (for the Plaintiff) to signify his intention to return all documents lodged by both sides in respect of which registration had been withheld “since it did not appear that the disputes could be resolved in the near future”. Accordingly, various documents withheld from registration were returned to the Plaintiff and the 3^rd Defendant through their respective solicitors on 20 July 2010[37].

44.This was followed by a period of inaction or inactivity until a Notice of Intention to Proceed was filed by the Plaintiff in the Action on 26 July 2018[38]. Meanwhile, by various personal letters dated 25 April 2018, 8 and 9 May 2018, the Plaintiff requested the Registrar to dispense with the previous request made by Messrs. Shea & Co on his behalf for withholding registration of documents pertinent to the Company[39].

45.On 15 May 2018, the Registrar wrote to seek confirmation from Messrs. Shea & Co (previously acting for the Plaintiff). The Registrar also wrote to Messrs K.B. Chau & Co. (acting for the 3^rd Defendant) to invite representation within 14 days notifying that “the [Registrar] may proceed to register Pending Documents if no reply was received from them within 14 days”. One of the Pending Docuemnts was a Form ND2A lodged on 16 April 2018 by the Plaintiff reporting the appointment of himself as director of the Company with effect from 13 April 2018[40].

46.It would appear that no reply was received from Messrs. Shea & Co since the Plaintiff notified the Registrar on 16 May 2018 that he would act personally. However, for one reason or another there was also no reply from Messrs K.B. Chau & Co within the prescribed period of 14 days.

47.On 7 June 2018, the Plaintiff further wrote to the Registrar to request for removal of the Important Notice[41] on the file of the Company which warned “It has been brought to the notice of the Companies Registry that there are disputes as to the directorship of the Company.  The Company’s record may therefore be incorrect”.

48.In the absence of any objection from Messrs K.B. Chau & Co or the 3^rd Defendant, the Plaintiff’s request[42] was acceded to and the Form ND2A lodged by him on 16 April 2018 was registered (see Paragraph 46 above). It would also appear that an amendment was subsequently filed on 5 July 2018 to change the date of appointment of the Plaintiff as director of the Company thereunder from 13 April 2018 to 12 January 2018[43]. The reason or basis for this amendment was not clear from the evidence before the Court.

49.Thereafter, the Plaintiff also succeeded in registering an Amended Annual Return of the Company for 2018 (also on 5 July 2018[44]) and an Annual Return for 2019 (on 20 March 2019[45]) which showed that he was the sole director of the Company.

50.However, the 3^rd Defendant managed to register the Impugned Form on 22 March 2019 (reporting her appointment as director of the Company with effect from 12 January 2018 and cessation of the Plaintiff as director since 12 January 2018[46]). Upon receiving the system-generated email notification on 27 March 2019[47], the Plaintiff immediately wrote to the Registrar to raise objection by a letter dated 28 March 2019 and request for an investigation. 

51.On or about 10 April 2019, Messrs. Yan Lawyers acted on behalf of the Plaintiff to follow-up on the investigation undertaken by the Registrar, who also invited representation from the 3^rd Defendant (represented by Messrs. K. B. Chan & Co as from 30 May 2019).  Despite the investigation, the Registrar was unable to resolve the dispute between the parties.

52.On 26 July 2019, the Registrar decided that a Form ND2A attempted to be lodged by the Plaintiff on 28 March 2019 (seeking to undo the effect of the Impugned Form) was not acceptable for registration in light of the disputes. The same was returned to the Plaintiff[48]. The Registrar however took the precaution to reinstate the Importance Notice (see paragraph 47 above) on the file of the Company maintained by the Registry.

THE ORIGINATING SUMMONS

53.In light of the refusal of the Registrar to remove the Impugned Form or to rectify the record by registering the “remedial” Form ND2A, which the Plaintiff attempted to lodge on 28 March 2019, the default position, as a matter of public record, is that stated on the Impugned Form. Hence, the Plaintiff issued the Originating Summons herein on 6 September 2019.

54.In short, the Plaintiff seeks (1) a declaration to the effect that the Impugned Form is null and void and of no effect; (2) an order for removal of the Impugned Form or rectification of the record of the Company maintained by the Registry, pursuant to section 42 of the Ordinance, which provides that:

“(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.”

55.It transpired that due to the failure on the part of those concerned to lodge annual returns and other company documents in compliance with the relevant regulatory provisions under the (BVI) Business Companies Act 2002, BHI Holdings was struck-off the register of companies on 1 May 2008 and dissolved by operation of law on 30 April 2015.

56.Likewise, BHIP and BHIHK were struck-off the register of companies on 1 May 2006 and dissolved by operation of law on 30 April 2016 (see the Opinion on BVI law (dated 8 July 2020) of Messrs. Harney, Westwood & Riegels commissioned by the 3^rd Defendant[49]).

57.This is not the forum to discuss where the fault lies. However, the net effect is that by reason of the dissolution of BHIP and BHIHK (collectively 100% shareholder of the Company), no valid annual general meeting of the Company could have been held since 1 May 2006. Therefore, the purported appointment of the 3^rd Defendant on 12 January 2018 as the sole director of the Company, as evidenced in the Impugned Form, could not have been valid. This is the basis of the Plaintiff’s application under the Originating Summons.

DISCUSSION

58.The position taken by Miss Tong (for the Plaintiff) is disarmingly straightforward.  She emphasized that an application under section 42 could be made by “any person” and therefore the ins and outs between the Plaintiff and the 3^rd Defendant (in the Action) were utterly irrelevant. Given the undisputed legal effect (i.e. lack of power or authority for anyone to act on behalf of BHIP and BHIHK at the material time), the information contained in the Impugned Form was unarguably inaccurate, ineffective, invalid and/or furnished without authority within the meaning of section 42.

59.Miss Tong was also quick to rely on the 2 issues arising from Impugned Form (as identified in Paragraph 10 of the Registrar’s Statement) and submitted that the application under the Originating Summons would only turn on those issues, namely:

(a)  Whether the 3^rd Defendant was validly appointed as director of the Company on 12 January 2018;

(b)  Whether the Plaintiff in fact ceased to be director of the Company on 12 January 2018.

60.In essence, Miss Tong’s submission was that due to the dissolution of BHIP and BHIHK, no shareholders’ resolution could have been passed by the Company to effect the removal of the Plaintiff or appointment of the 3^rd Defendant on 12 January 2018 as stated on the Impugned Form.

61.Mr Mak (for the 3^rd Defendant) however focused on the issue pertinent to the true ownership of the shares in BHI Holdings (and hence BHIP and BHIHK), which would be determinative of who had the authority to appoint and remove the director(s) of the Company at all material times since about 16 February 2004.

62.Mr Mak also drew attention to the provision under section 42(4) of the Ordinance, which reads:

“(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 in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register.”

63.Further, as to the exercise of the Court’s power pursuant to section 42(1) for removal of information from the Register, Mr Mak referred to In Re China Nice Education Research Publishing Investment and Management Co Ltd [2016] 3 HKLRD 525, wherein Godfrey Lam J explained:

“17. The effect of the language of subsection (4), it seems to me, is to restrict the power to order removal and to make rectification the ordinary remedy where the situation referred to in subsection (1) arises. Removal is to be ordered only if the two additional conditions as set out in subsection (4) are satisfied:

(1)  First, the applicant has to show that registration of a document showing the rectification is not good enough; the continuing presence of the incorrect information will cause material damage to the company. Note that it is damage to the company, not to any other person such as the applicant, that needs to be shown.

(2)  Secondly, the applicant has to show that the company’s interest (note, again: not any other person’s interest) in removing the information outweighs the interest of other persons in the information continuing to appear on the register.”

64.Although this is not the substantive hearing, Mr Mak submitted that in the determination of the application under the Originating Summons, the question as to whether the Impugned Form should be removed, as one of the relief sought, would necessarily touch upon the 2 questions (referred to in paragraph 63 hereinabove) which would in turn hinge on the true ownership of the shares of the Company at all relevant times.

65.There is some strength in this argument since the Company is a private company. Arguably, it is up to the rightful owner of the Company (as found by the Court) to ratify, rectify or remedy whatever act that was done (or purported to be done) by or on behalf of the Company at the material times, provided that no innocent third party is affected. This will include filing of documents for registration, which would otherwise be irregular.

66.Miss Tong relied on the decisions of DHCJ Mr William Wong SC in Forever Up Holdings v Tong Yan Wa [2018] HKCFI 2775, DHCJ To in In Re Honour Island Development Limited [2018] HKCFI 636 and Madam Au-Yeung J in Re Wellable Investments Limited (unrep), HCMP 510/2016, 11 April 2016 for the proposition that as a matter of practice, the court would grant an order directing rectification or removal once the criteria under section 42(1) was satisfied without reference to any discretionary factor. Presumably, this was a reference to the additional requirements under section 42(4). 

67.I am not prepared to accept the generalization attempted by Miss Tong.  In each of these 3 precedents, the falsity or inaccuracy of the registered documents were proven and/or beyond dispute. In the circumstances, the readiness of the Court to make an order pursuant to section 42(1) is understandable and well justified.

68.Importantly, on the facts of this case, if the Court is minded to order removal of the Impungned Form or rectification to the effect that the Impugned Form is null and void, the default position will be that the Amended Form ND2A filed by the Plaintiff on 5 July 2018[50] would be resurrected (the “Resurrected Form”).

69.Ironically, the Resurrected Form (purporting to report the appointment of the Plaintiff as director of the Company with effect from 12 January 2018) would inevitably suffer the same defect by reason of the dissolution of BHIP, BHIHK and BHI Holdings as aforesaid.  Miss Tong argued that (1) the Resurrected Form was not an issue before the Court and should be disregarded; and (2) it would be up to the 3^rd Defendant to make an appropriate application under section 42(1) as and when the situation arose.

70.With respect, I disagree with Miss Tong’s submission. In the spirit of the underlying objectives of the Civil Justice Reform, the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive right of the parties (RHC Order 1A, rule 2(2)).

71.It is not helping anyone for the Court to put blinkers on itself to approach the application under the Originating Summons in the fragmented manner as advocated by Miss Tong. I do not see how the Court can order the removal or rectification of the Impugned Form without at the same time considering and providing for, whether by way of an annotation on the Register or otherwise, the equally inaccurate, ineffective and invalid Resurrected Form, which had likewise been furnished without authority and would be misleading if allowed to remain on the Register.

72.Whilst not in the mood of criticizing, I firmly believe that skirmishes of this sort are counter-productive. Lamentably, the cross-filing of registration documents is commonplace in cases involving disputes over the ownership of a company amidst the perceived lack of power and limited resources of the Registrar[51].

73.For that matter, the Plaintiff is not to be regarded as “any person” with no interest in the series of company documents in question and the related proceedings. In so saying, I am not even beginning to express any view on the issues in dispute between the parties such as who is the rightful owner of the various companies, which are hotly contested.

STAY OF PROCEEEDINGS

74.Miss Tong relied on Poon Ka Man Jason v Cheng Wai To & Ors. [2018] HKCFI 771 (at paragraph 37) for the proposition that where an action was commenced as of right, as in this case, the Court should only grant a stay in “rare and compelling circumstances” and when there were “very good reasons”.

75.I do not think Mr Mak disagreed with this proposition. However, Mr Mak sought to draw a distinction between a permanent stay and a temporary stay as expounded by Kwan J (as she then was) in Tam Man Kou & Ors v Chime Corporation Limited, HCMP 4146 of 2001, unrep, 11 March 2005 (at paragraph 13) wherein the learned judge further explained :

“14.  The correct approach, . . .in an application for a temporary stay of proceedings is “to consider the balance of convenience and fairness as between the parties” (Alfred McAlpine Construction Ltd. v Unex Corporation Ltd. (1994) 70 BLR 26 at 45C to D, per Glidewell LJ; applied in Clinton Engineering Ltd. v B-Tech (Holdings) Ltd. [2001] HKCU 1002 at para. 9 and SWE Ltd. v Chong Lai Fun, HCA No. 1064 of 2004, 28 October 2004, Reyes J, pages 5 and 6; see also Halsbury’s Laws of Hong Kong, Vol. 5(2), footnote 7 to para. [90.0938]) and the court should exercise its discretion in such a manner “to ensure that its procedures are used in a logical, fair and cost-efficient manner” (SWE Ltd., page 5).  The question at hand is not a question of deprivation of the right of a litigant to proceed altogether, but a question of case management.”

76.Miss Tong further relied on Fok Chun Yue Benjamin v Fok Chun Wan Ian [2015] 2 HKLRD 212 wherein Lam VP said (at paragraph 60) “A court does not order a temporary stay without any purpose as it would be wrong in principle to do so”.  

77.I do not think Mr Mak would have any qualms with this principle either. As a matter of fact, in Fok Chun Yue Benjamin (supra), the Court of Appeal did impose a temporary stay pending the taking out of a fresh action to resolve the related dispute between the parties over the construction of a settlement agreement.

78.In this case, I tend to think once the issue of the rightful ownership of BHI Holdings (and hence BHIP, BHIHK and the Company) has been resolved in the Action, the issue as to who was (or could have acted as) director of the Company at all relevant times would fall by the wayside. There is no reason why the Plaintiff and the 3^rd Defendant should not try to agree that the issue under the Originating Summons should abide the outcome of the Action in respect whereof the trial is to resume in due course.

79.Alternatively, I observe that the Action was apparently adjourned on 29 July 2008 before the Plaintiff and the 3^rd Defendant (the first defendant therein) were called to give oral evidence. Logically, consideration should be given to an application for the Originating Summons to be heard together with the Action upon resumption of the trial.

80.Miss Tong objected to such an approach arguing that there was no “commonality of issues”.  With due respect, the discretion of the Court is wider than that contemplated by Miss Tong. Quite apart from the inherent jurisdiction of the Court to stay proceedings, which is preserved by section 16(3) of the High Court Ordinance (Cap 4), RHC Order 4, Rule 9(1) specifically provides as follows:

“. . . if it appears to the Court that . . .(c) that for some other reason it is desirable to make an order under this rule, the Court may order those causes or matters to be consolidated on such terms as it think just or may order them to be tried at the same time, or one immediately after another, or may order any of them to be stayed until after determination of any other of them.” (emphasis added)

81.Although RHC Order 4, rule 9(1) is not referred to in the Summons, it does seek “2. All further or alternative directions. . .as this Honourable Court may deem just and expedient”.  

82.In the peculiar circumstances arising from the Action, which is still part-heard with a clear demarcation point in the factual evidence, I am of the view that an application under Order 4, Rule 9(1) should be made as soon as practicable to the trial judge of the Action in the event that no agreement can be reached along the line as identified in paragraph 78 hereinabove. Needless to say, nothing herein shall be construed to fetter the discretion of the trial judge upon such application.

83.For the sake of completeness, Miss Tong informed the Court that on the strength of the Impugned Form, the 3^rd Defendant claimed to be the director of the Company and had intervened in a case taken out by the Company (upon the instruction of the Plaintiff) before the Higher People’s Court of Guangdong Province (PRC) (Case No. 146 of 2018).  However, the case was suspended or stayed on 18 October 2019 pending resolution of the dispute under the Originating Summons.

84.By parity of reasoning as set out in paragraphs 68 and 69 hereinabove, given that the validity of the Resurrected Form would almost certainly be called into question, it is doubtful whether the rectification or removal of the Impugned Form, per se, would help resolve the issues between the parties before the Higher People’s Court. In fact, this is all the more reasons that the Court should strive to maintain the status quo pending final determination of the issues in the Action.

85.It is trite that the Court has jurisdiction according to ordinary public law principles to control over the way in which the Registrar carries out her duty under the Ordinance (see Hoffmann J (as he then was) in Re Calmex Ltd (1988) 4 BCC 761).  In the circumstances, I am of the view that “Important Notice” (referred to in paragraph 47 hereinabove) shall be maintained until further order of the Court. In addition, reference to the decision herein shall be added to the Important Notice pursuant to section 44 of the Ordinance.

DISPOSAL

86.On the foregoing considerations, I order as follows:

(1)  Subject to paragraph (2) hereinbelow, all further proceedings herein be stayed until further order of the Court;

(2)  In the event that no agreement can be reached within 14 days between the Plaintiff and the 3^rd Defendant to the effect that the Plaintiff’s application under the Originating Summons herein shall abide the outcome of the Action, the 3^rd Defendant do take out an application for directions before the trial judge in the Action pursuant to RHC Order 4, Rule 9(1);

(3)  The application under Paragraph (2) herein, if any, be expedited and accorded priority in the next earliest sitting of Deputy High Court Judge Anthony To;

(4)  Subject to any application that may be made by any party herein within 14 days, the 1^st Defendant do take steps to ensure that, until further order of the Court:

(a)  the Important Notice (referred to in paragraph 47 hereinabove) currently endorsed on the record of the Company maintained by the Registrar shall remain in place;

(b)  an additional entry be made in the record of the Company maintained by the Registrar making reference to the decision herein;

(c)  no registration of any further or other documents pertinent to the ownership or directorship of the Company be made without leave of the Court;

(5)  there be liberty to apply.

87.In all circumstances, the application under the Summons is akin to a direction hearing. I make an order nisi that costs be in the cause as between the Plaintiff and the 3^rd Defendant. There be no order as to costs of the 1^st Defendant and the 2^nd Defendant vis-à-vis any of the parties.

88.In passing, I am advised that the hearing of the Plaintiff’s application to file the Draft RAMSOC is still pending in the Action. Whilst this is a matter for the learned Listing Judge, it seems logical for a joint application to be made for the same to be heard also before Deputy High Court Judge Anthony To, who is already seized of the matter.

89.It remains for me to thank counsel for their able assistance.

Ms Sara Tong and Ms Natalie So, instructed by Li & Partners, for the Plaintiff  

Attendance of the 1^st Defendant being excused

The 2^nd Defendant did not appear and was not represented

Mr Andrew Mak, instructed by K.B. Chau & Co., for the 3^rd Defendant