Securities and Futures Commission v. Mandarin Resources Corporation Ltd. and Another
Read the full judgment text of CACV 38/1999 on BabelCite. This Court of Appeal judgment was delivered on 23 March 1999.
1. We do not propose to call upon Mr Heslop.
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CACV000038/1999 CACV 38/99 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 38 OF 1999 (ON APPEAL FROM HCCW 348 OF 1996)
------------------- Coram: Hon Liu, JA, Hon Leong, JA, Keith, J in Court Date of Hearing: 23 March 1999 Date of Judgment: 23 March 1999 ---------------------- J U D G M E N T ---------------------- Liu, JA: 1. We do not propose to call upon Mr Heslop. 2. Burrell, J. decided that the Mandarin Resources Corporation Limited (the company) could take what he described as a "passive role" in the winding-up proceedings. That role as specified by the judge together with the extent to which the company was allowed to participate and is clear to the parties. The company feels aggrieved by the directions of Burrell, J. given for the conduct of the trial of the winding-up petition due to be heard on, I believe, 19 April 1999, hence this appeal. 3. Under s. 37A(1) and s. 45(1) of the Securities and Futures Commission Ordinance, the Securities and Futures Commission (SFC) is enabled by law to bring winding-up proceedings if it appears to SFC under the former provision that the affairs of a listed company are being or have been conducted in a manner unfairly prejudicial to the interests of the members generally or some part of the members of the company involved and under the latter provision if it appears to SFC that it is expedient in the public interest for the company to be wound up on the just and equitable principle. Under these provisions respectively, SFC presented a petition against the company with Mr Chim as the 2nd respondent. 4. In this appeal, the company is the only appellant and the respondent is SFC. At the conclusion of the submissions made to this court by Mr Miu, we feel sufficiently assisted to give judgment. The order of Burrell, J to confine the company to a passive role in the hearing leads to the two queries canvassed by Mr Miu, counsel for the company: (1) whether the judge had the right to impose any limit on the company, and (2) whether, in the circumstances, the limit so put upon the company is appropriate. Counsel for the company submits that the power to present a winding-up petition by SFC is a statutory one. The mechanics, as far as the instant practice directions are concerned, has yet to be covered by decided cases, but the underlying principle in the usual decisions is that where the majority and minority shareholders do not see each other eye to eye in a company winding-up, there would be no warrant for the company to intervene, particularly for the running up of a bill of costs at the expense of the minority shareholders. 5. The principle, in my view, may be extended to the petition presented by SFC under s. 37A(1) of the Securities and Futures Commission Ordinance. 6. Mr Miu for the company argues that there is some possibility for public interest to conflict with minority interests, but that is sheer speculation at the moment and counsel has not even been able to show any real risk of such a conflict arising. 7. Counsel also draws the attention of this court to the possibility of the minority shareholders all voicing their objection to the company being wound up at an Extraordinary General Meeting (EGM) if and when it is held. As can be gleaned from the documents before this court, the attempted convening of the company's EGM was legitimately halted. Counsel's submission would appear to be premised on not one but two possibilities - the possibility how the minority shareholders would react and the possibility of a resurrection of the attempted EGM. This latter submission of counsel must be even more far-fetched. To sum up: no circumstances have been shown to justify a departure from the core principle enunciated in the usual authorities. The judge was right in applying the core principle and, in his discretion, marking the role of the company in the hearing of the petition to the extent he did. 8. Finally, it is contended on behalf of the company that an order given by Rogers, J. is wholly inconsistent in terms with that given by Burrell, J. Paragraph 1(b) of the order of Rogers, J. provides:
9. Counsel maintains that this constitutes res judicatum - estoppel by court record. What must not be lost sight of is the fact that the order of Rogers, J merely sanctioned the payment of allowable legal costs which had been incurred or might be incurred by the company. It was not an order giving directions for the trial of the petition. Not only was the order of Rogers, J. unrelated to the conduct of the trial, it provided no authorisation to the company to appear, active or otherwise, in the hearing of the winding-up petition. Moreover, the order of Rogers, J. was made expressly without prejudice to the ultimate liability for or incidence of costs. Clearly, the order of Burrell, J. given for case management is one of a wholly different nature and made at a different stage of the proceedings. In sum, the one would have had little bearing on the other even if the order of Rogers, J. had been made without the proviso that I have endeavoured to emphasise. 10. It is quite unnecessary to deal specifically with the grounds of appeal. The complaints of the company are sufficiently encapsulated in the three areas I have highlighted. I am not persuaded that the order of Burrell, J. on the point sought to be impugned by Mr Miu can be, in any way, faulted. For all these reasons, I would dismiss the appeal. Leong, J.A.: 11. I agree that this appeal should be dismissed. Keith, J.: 12. For the reasons given by Liu J.A., I also agree that this appeal should be dismissed. (Submissions on costs) Liu, J.A.: 13. We order that the appeal be dismissed with costs payable by the company without prejudice to SFC taking any steps for seeking costs against a director or directors of the company.
Representation: Mr Philip Heslop, QC & Anderson Chow inst'd by M/S Herbert Smith for Petitioner (1st Respondent). Mr Nelson L. Miu inst'd by M/S Wilkinson & Grist for 1st Respondent (Appellant). 2nd Respondent in person. |
Further hearings and rulings under CACV 38/1999